This Month In Coal - July 2017

Rio Tinto Agrees to Sell C&A to Yancoal

After receiving a competitive bid from Glencore and a counter offer from Yancoal, Rio Tinto has ultimately decided to sell its wholly-owned subsidiary Coal and Allied Industries Ltd. to Yancoal. Rio Tinto said it felt Yancoal Australia Ltd.’s offer of $2.69 million had a higher level of completion certainty. The sale is still contingent on a vote by the company’s shareholders.

The recommendation follows consideration by the board of a revised offer from Glencore plc received on June 23, and a revised offer from Yancoal received on June 25 comprising further improved terms. Yancoal’s most recent offer includes total consideration of $2.69 billion, comprising $2.45 billion in cash payable in full on completion, as well as $240 million via unconditional guaranteed royalty payments of which $200 million will be received before the end of 2018. It also includes an increased break fee amount provided by Yancoal’s parent company, Yankuang, from $100 million to $225 million and the receipt or waiver of all regulatory approvals required to close the transaction.

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Clean Coal Technologies Signs Agreement for Pristine M Plant in Wyoming

Clean Coal Technologies Inc. (CCTI), an emerging cleaner-energy company using technology to convert untreated coal into a cleaner burning and more efficient fuel, announced they have signed a binding agreement with Wyoming New Energy Corp. (WNEC) for the build-out of its first commercial facility in Wyoming.

WNEC has recently entered into an engagement agreement with Piper Jaffray to raise up to $80 million in debt financing to build a 2-million-ton CCTI Pristine M Plant in the Powder River Basin.

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Coal Operator is Fined for Obed Mountain Mine Spill in Canada

Prairie Mines & Royalty ULC (formerly known as Coal Valley Resources Inc.) pleaded guilty in Alberta Provincial Court to two counts of violating the Fisheries Act. Judge C.D. Gardner sentenced the company to pay monetary penalties totaling $3.5 million.

A portion of the fine ($1.15 million) will be placed into a trust to be managed by the University of Alberta to create the Alberta East Slopes Fish Habitat and Native Fish Recovery Research Fund. A total of $2.15 million will be directed to the Environmental Damages Fund.

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NMA Urges Reform of Broken Program for Abandoned Coal Mines

The chief executive of the National Mining Association (NMA) representing the U.S. coal industry recently told a congressional panel that the federal program funded by the coal industry to help clean up old abandoned coal mines has been plagued by an inefficient structure and lax management leading to billions of dollars spent for other purposes.

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MSHA Launches Initiative to Address Injuries

Data recently compiled between October 2015 and March 2017 by the U.S. Department of Labor’s Mine Safety and Health Administration shows that less experienced miners — both at a mine and at a specific occupation — suffer injuries at a higher rate than more experienced miners. Over this 18-month period, miners with one year or less of experience at a mine suffered 903 injuries, compared to 418 for those who had worked at a mine between one and two years. Miners with one year or less job experience suffered 603 injuries, compared to 409 for those with between one and two years job experience.

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Alpha Divests Green Valley

Alpha Natural Resources (ANR) has sold substantially all of the assets of two separate operations, a coal mining complex and a natural gas operation, both located in central West Virginia. The Green Valley mining assets in Nicholas and Greenbrier counties are being sold to Quinwood Coal Co. The divestiture includes the Green Valley No. 1 prep plant and related permits, which have been idle since the second quarter of 2014.

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This Month In Coal - June 2017

Warrior Met Coal Ramping Up to Historical Levels

In its first quarter earnings reports, Alabama-based metallurgical coal producer Warrior Met Coal defines its strength and position in the market. “We are pleased with our strong performance in this first quarter reporting as a newly listed company,” Walt Scheller, CEO of Warrior Met Coal, said. “Over the past year, we have established Warrior as the premier and only ‘pure-play’ met coal producer in the U.S. Warrior’s unique value proposition is based on two principal factors: the strength of our met coal assets, and our competitive positioning as a formidable operator in the era of ‘new coal.’” Warrior began trading on the NYSE on April 13.

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Peabody to Keep Metropolitan Operation

Peabody has decided to retain the Metropolitan metallurgical coal mine and its associated 16.67% interest in the Port Kembla Coal Terminal after proposed purchaser South32 terminated the purchase contract. South32 was unable to obtain clearance from the Australian Competition and Consumer Commission (ACCC) within the timeframe required under the contract.

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Committee to Probe Coal Mine Incident in Iran

The Fars News Agency in Tehran reported that Iranian Industry Minister Mohammad Reza Nematzadeh declared that a special team will probe into a deadly coal mine explosion in the northern part of the country. “A fact-finding committee has been set up to look into the incident caused by a deadly blast in Zemestanyurt coal mine in the northern city of Azadshahr in Golestan province,” Nematzadeh said.

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Foresight Asks to Re-enter Deer Run Longwall Mine

More than a year after its Deer Run longwall mine in southern Illinois was temporarily sealed to put out a stubborn underground fire or hotspot, Foresight Energy LP may have plans to reopen the mine later this year. In April, the St. Louis-based company formally asked the federal Mine Safety and Health Administration (MSHA) for authorization to re-enter the mine near Hillsboro in Montgomery County to check on its status, a MSHA spokeswoman said. As of early May, there was no indication the federal agency had given its okay.

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China to Further Consolidate Coal Operations

China plans to create about 10 mega coal companies by 2020 through mergers and reorganizations, as part of its long-standing efforts to cut overcapacity, according to China Daily. The country is preparing guidelines to overhaul the sector and it hopes to create several new large coal companies with annual capacity of 100 million metric tons (mt) by 2020, explained Wang Xiaolin, deputy director of the National Energy Administration (NEA).

Six Chinese producers have already attained that production level, said Zhang Hong, deputy secretary-general of the China National Coal Association.


Anglo to Sell its Interest in Drayton in Australia

Anglo American confirmed it has entered into an agreement with Malabar Coal Ltd. to sell its 88.17% interest in the Drayton thermal coal mine and Drayton South project, located in New South Wales, Australia.

Malabar Coal Ltd.’s primary focus up until now has been the development of its Spur Hill underground coking coal project in the upper Hunter Valley of New South Wales. The Drayton transaction remains subject to several conditions and its terms are confidential. Anglo American ceased mining activities at the Drayton mine during 2016.


Zinke Lifts Federal Coal Leasing Moratorium

In late March, U.S. Secretary of the Interior Ryan Zinke issued Secretarial Order 3348 revoking the January 16, 2016, order 3338 issued by former Secretary Sally Jewell that placed a moratorium on federal coal leases. Order 3338 imposed a three-year moratorium, with exceptions, on further coal lease sales pending completion of a Programmatic Environmental Impact Statement (PEIS) analyzing potential leasing and management reforms of the federal coal program.

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This Month In Coal - May 2017

Anglo Sells South African Coal Assets

Just a few years ago South Africa’s coal industry was on the up and up, shrugging off the malaise affecting the industry elsewhere. Now, many producers face closure in a stunning reversal of fortunes.

As coal mines closed in the US, the UK and elsewhere, South Africa’s mines appeared to thrive. The world’s sixth largest exporter, the country’s mines were however geared mostly toward a single local customer — state electricity utility Eskom.

Only a third of South Africa’s coal is shipped abroad. The rest is sent to a fleet of local power plants, mostly in Mpumalanga province to the east of the country. More than 96% of Eskom’s electricity came from coal. For producers such as Anglo American, BHP Billiton, Xstrata and others, it was a sweet deal with a guaranteed customer.

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Yancoal Secures Approval to Buy Rio Tinto’s Australian Coal Mines

The $2.5 billion U.S. deal between Yancoal and Rio Tinto has been approved by Australia’s Foreign Investment Review Board (FIRB), according to Xinhua. The Australian-based Yancoal, controlled by a Chinese parent company, now has regulatory approval to close the deal that will see them pick up key mines as Rio Tinto continues to divest its Australian assets.

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North Korean Ships Head Home After China Refuses Shipment

A fleet of North Korean cargo ships is heading home to the port of Nampo, according to the Asia Times, after China ordered its trading companies to return coal. Following repeated missile tests that drew international criticism, China banned all imports of North Korean coal on February 26, cutting off the country’s most important export product. To curb coal traffic between the two countries, China’s customs department issued an official order on April 7 telling trading companies to return their North Korean coal cargoes, said three trading sources with direct knowledge of the order.

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India to Offer Complete Pricing Freedom to Private Coal Miners

India’s Ministry of Coal has decided to offer pricing freedom and revenue sharing contracts as sweeteners to woo private investors into commercial coal mining in the country. Having thrown open the coal sector to private investors for commercial mining for the first time since 1973 when coal industry was nationalized, India would offer total reserves of around 30 million metric tons (mt) in the first tranche to be allocated to such private miners through the reverse auction route.

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News - This Month In Coal - April 2017

Vale Completes Moatize Coal Transaction With Mitsui

This week, Vale announced it had completed the $770 million equity transaction with Mitsui & Co. Ltd. (Mitsui) associated with the divestment of part of its interest in the Moatize coal mine and in the Nacala Logistics Corridor (NLC). Vale received $733 million and the remaining $37 million will be paid at the conclusion of the project finance transaction of as much as $2.7 billion, which will help fund the project and is still expected to happen in 2017.

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Cyclone Debbie Sweeps through Queensland

Cyclone Debbie struck Queensland at the end of March and rail provider Aurizon confirmed none of the four railways serving regional coal mines were in full operation while two of them were entirely out of action. The disruption will likely spark a short-term rally in coking coal prices given that Queensland produces more than half of the world’s seaborne coking coal.

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Teck Updates Coking Coal Guidance

Teck Resources expects coking coal sales volumes for the second quarter of 2017 to be at least 6.8 million metric ton (mt), and mining costs in the second quarter are expected to be in the range of $47/mt to $51/mt. For the first quarter, Teck realized an average price between $209/mt to $212/mt, at the higher end of its previous guidance range. Sales volumes in March improved relative to weak sales in January and February, but not sufficiently to result in sales above 5.8 million-6 million mt in the quarter. Final quarterly sales will depend on timing of shipments.

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Trump to Overhaul US Energy Strategy

U.S. President Donald Trump signed an executive order on energy independence on March 28 that will re-evaluate former President Barack Obama’s Clean Power Plan (CPP) and lift the ban on federal leases for coal production.

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