Coal - where to now?

[noirua]

It is very difficult to solve this coal situation as companies will move to oil, if they can, if coal prices move higher. Lovely for Bayan as much of its coal is low grade thermal particularly from its Tabang mine. Australia has its thumb in the pie with Kangaroo Resources Limited now 100% owned by Bayan but the shares are held frozen in Australia by The High Court in Canberra.

Bayan Resources completes A$515.2M acquisition of Kangaroo Resources

The company offered 15 Australian cents per share in mid-August, valuing Kangaroo at A$515.2 million.

www.spglobal.com

WEC: WA Court expands terms of freezing order against Bayan

ASX Release ASX Release The Manager Company Announcements Office Australian Stock Exchange WA SUPREME COURT...

www.marketscreener.com

China's plans are to extend the use of coal fired power stations despite saying the opposite.

China Is Planning to Build 43 New Coal-Fired Power Plants. Can It Still Keep Its Promises to Cut Emissions?​

20 August 2021

China Is Planning 43 New Coal-Fired Power Plants. Can It Still Keep Its Promises to Cut Emissions?

China built three times more new coal power capacity as all other countries in the world combined in 2020.

time.com

China had 1,082 power stations at the end of 2020 ( use VPN or you may be blocked for multiple visits ):

Number of coal power plants by country 2021 | Statista

Mainland China has the greatest number of coal-fired power stations of any nation in the world.

www.statista.com

So basically China is having a laugh when it says we are planning to cut emissions. What they are really saying is that in the more developed parts of China new technology will bring about less emissions. But in the North of China they will carry on building coal fired power stations. Yes, less power stations built each year because they will be getting closer to the final number required.
Coal emissions will effect those in the North of China but further south where all the money clout is emissions will reduce. So heigh-ho, we have reduced emissions and slowed down the number of coal fired power stations being built.

 

[Ann]

Losing face is big in China, just wondering about the next response

Yes, it is most unfortunate. However their pain was not of our doing, let's hope they can move on from this in a positive manner.

 

[greggles]

US power companies ramping up their coal consumption due to surging natural gas prices.

Coal-fired power is on the rise in America for the first time since 2014

In a blow to the climate movement, US power companies are ramping up their coal consumption due to surging natural gas prices.

edition.cnn.com

It looks like it's going to be difficult to keep a lid on demand in the short term. Coal prices are likely to remain high during the northern hemisphere winter at the very least.

 

[sptrawler]

US power companies ramping up their coal consumption due to surging natural gas prices.

Coal-fired power is on the rise in America for the first time since 2014

In a blow to the climate movement, US power companies are ramping up their coal consumption due to surging natural gas prices.

edition.cnn.com

It looks like it's going to be difficult to keep a lid on demand in the short term. Coal prices are likely to remain high during the northern hemisphere winter at the very least.

Plus it shows how fragile their tenure is on reducing their emissions, when the bottom line gets hit, good intentions go out the window. There will have to be a lot of structural changes enacted to remove coal from the mix.

 

[Smurf1976]

Something to consider about the US increase in consumption is that it will plausibly be matched by an increase in US coal mining.

The US does export coal but to substantial extent domestic production and consumption are tied, as consumption fell mines were scaled back rather than exporting the coal, so the reverse may also hold true.

Also tied in with that is gas and oil. It's gas versus coal for power generation and noting that much of the US' gas production comes about as a by-product of oil production. Either out of the same well or because someone drilling for oil failed to find any but they did find gas instead. Both extremely common situations in the US with the practical effect of linking US gas production not just to US gas prices but also to international oil prices. It's a complex web basically.

 

[Ann]

.....and a bit more comment about coal with some interesting charts. There is no US ETF fund for coal any longer so Peabody Energy chart is probably going to be the best indicator to watch for coal other than the commodity price itself. I think I will toss up a chart for US PeabodyEnergy myself.

''US Coal Stockpiles Slump To Two Decade Low As Power Plant Demand Surges
Wednesday, Oct 27, 2021 - 06:30 PM

One of the biggest ironies this year is the transition from fossil fuel generation to green energy has created a global energy crisis that is forcing the U.S., among many other countries, to restart coal-fired power plants ahead of the Northern Hemisphere winter. Coal is roaring back this fall but supplies are not catching up with demand.

According to Bloomberg, US coal supplies dropped to 84.3 million tons in August, the lowest level since 1997." ....

More here....

https://www.zerohedge.com/commoditi...the+survival+rate+for+everyone+drops+to+zero)

 

[Ann]

Found this article and chart interesting from Zero Hedge "Coal Demand Booms Under Biden As Prices Hit 2009 Levels" (ignoring any political bias). https://www.zerohedge.com/commodities/coal-demands-boom-under-biden-prices-hit-2009-levels



and here is a chart from an historical view just for interest. The spike in the 2008 ish price is said to be related to the run-up from the GFC.

 

[Smurf1976]

Found this article and chart interesting from Zero Hedge "Coal Demand Booms Under Biden As Prices Hit 2009 Levels" (ignoring any political bias).

Keeping out of politics but on the physical side of coal consumption there's a link between it and the oil industry.

Oil price has a very major influence on drilling for and thus production of oil.

With oil, especially in the US, usually comes associated gas. That is natural gas is a by-product of oil production whether wanted or not.

Consequence of the above is that the boom in US oil production seen in recent years came with a boom in gas production and that pushed natural gas prices to very low levels.

Cheap gas then prompted a switch to gas in power generation and industry. That can be either by running existing gas-fired power stations as priority (so gas becomes the normally run plant and coal becomes the backup rather than the reverse - technically a bit of a hassle but it can be done) or it can be done by fuel conversion of existing plant (converting a coal boiler to run on gas is very doable).

Reverse all that if oil drilling slows as it has greatly done so. Gas production starts coming down, prices rise, industry needing steam (lots of factories need steam or hot water in large volume) and power generation starts going back to coal since it's cheaper.

Adding to that, the US gas price has a limited physical link to global markets via LNG. Capacity there is very limited but it's not zero so some linkage does exist and suffice to say international LNG prices have reached extremely high levels in recent times, prompting LNG export from the US to run flat out and that also adds upwards pressure on the gas price which then flows through to coal consumption.

Same dynamic is playing out in Australia by the way. I won't name them due to confidentiality but there are certainly some manufacturing operations that have quietly switched to coal in recent times. As gas prices have risen it was either coal or close, gas is simply too costly to be viable so coal it is.

 

[Ann]

Same dynamic is playing out in Australia by the way. I won't name them due to confidentiality but there are certainly some manufacturing operations that have quietly switched to coal in recent times. As gas prices have risen it was either coal or close, gas is simply too costly to be viable so coal it is.

Very interesting Smurf, looking at the SMR long term monthly chart makes me think it is going to be the next black gold rush. (up in stocks)

 

[Ann]

I found this very interesting, a way for the fundies to get on board with coal generation without upsetting the climate change agenda mob, in fact, they may even get applauded . Gotta love spin doctors.
This article from SMH was published back in August but I see the AFR only pick it up as an article this weekend.

"BlackRock joins Citi and HSBC in plan to close coal plants early
By Krystal Chia
August 4, 2021

BlackRock and other major financial institutions are working on plans to accelerate the closure of coal-fired power plants in Asia in a bid to phase out the use of the worst man-made contributors to climate change.

The world’s biggest asset manager is partnering with Citigroup, HSBC and the Asian Development Bank to buy the plants and operate them for as long as 15 years before closing the assets ahead of current schedules, according to people familiar with the matter, who asked not to be named discussing a private matter."

More here...https://www.smh.com.au/business/companies/blackrock-joins-citi-and-hsbc-in-plan-to-close-coal-plants-early-20210803-p58flh.html

 

[qldfrog]

I found this very interesting, a way for the fundies to get on board with coal generation without upsetting the climate change agenda mob, in fact, they may even get applauded . Gotta love spin doctors.
This article from SMH was published back in August but I see the AFR only pick it up as an article this weekend.

"BlackRock joins Citi and HSBC in plan to close coal plants early
By Krystal Chia
August 4, 2021

BlackRock and other major financial institutions are working on plans to accelerate the closure of coal-fired power plants in Asia in a bid to phase out the use of the worst man-made contributors to climate change.

The world’s biggest asset manager is partnering with Citigroup, HSBC and the Asian Development Bank to buy the plants and operate them for as long as 15 years before closing the assets ahead of current schedules, according to people familiar with the matter, who asked not to be named discussing a private matter."

More here...https://www.smh.com.au/business/companies/blackrock-joins-citi-and-hsbc-in-plan-to-close-coal-plants-early-20210803-p58flh.html

That is incredibly smart from them

 

[Ann]

Art of War 101

“The whole secret lies in confusing the enemy so that he cannot fathom our real intent.” ― Sun Tzu

“Engage people with what they expect; it is what they are able to discern and confirms their projections. It settles them into predictable patterns of response, occupying their minds while you wait for the extraordinary moment — that which they cannot anticipate.” – Sun Tzu

 

[qldfrog]

Art of War 101

“The whole secret lies in confusing the enemy so that he cannot fathom our real intent.” ― Sun Tzu

“Engage people with what they expect; it is what they are able to discern and confirms their projections. It settles them into predictable patterns of response, occupying their minds while you wait for the extraordinary moment — that which they cannot anticipate.” – Sun Tzu

So apt..and look at China..they definitively master the art

 

[sptrawler]

Art of War 101

“The whole secret lies in confusing the enemy so that he cannot fathom our real intent.” ― Sun Tzu

“Engage people with what they expect; it is what they are able to discern and confirms their projections. It settles them into predictable patterns of response, occupying their minds while you wait for the extraordinary moment — that which they cannot anticipate.” – Sun Tzu

Unusual for investment people to put money into what will end up a stranded asset, unless they have other plans for the sites?

 

[qldfrog]

Unusual for investment people to put money into what will end up a stranded asset, unless they have other plans for the sites?

Standed assets?..15y of increasing profit another 5y of extension after total grid collapse..all that for a pittance.great timing i think

 

[Dona Ferentes]

Unusual for investment people to put money into what will end up a stranded asset, unless they have other plans for the sites?

from the article:

Led by the Asian Development Bank (ADB), multinational lender HSBC and the philanthropic foundations of Jeff Bezos and the late John D. Rockefeller, the coalition is courting governments in south-east Asia with a plan to shut their relatively young coal-fired plants and replace them with low-emission alternatives [to establish] its “Energy Transition Mechanism” (ETM).

The financial architecture of the ETM is not settled, but the plan being devised by the bank’s energy specialist David Elzinga’s team envisages two funds.

The first fund would buy coal-fired power stations that are burdened by a high cost of capital, and use the fund’s lower cost of capital to settle the power station’s obligations sooner.

“It is basically a financial arbitrage,” [ADB energy specialist David] Elzinga tells The Australian Financial Review. ”Following an ETM transaction, the plant would continue to operate but for a much shorter amount of time and still pay the financial obligations of the investment."

“This would ensure the that the power system will be adequately supplied and just transition activities can be carried out to support those people and communities who depend on the power plants for their livelihood.”

Premature retirement of power stations could also earn the first fund carbon credits, which could prove lucrative ...

The second fund would build low-emission power generation to replace the shuttered coal-fired stations and ensure the participating nations are not left with a degraded power supply at a time when their population is demanding more energy, not less.

 

[Ann]

Stranded assets?..15y of increasing profit another 5y of extension after total grid collapse..all that for a pittance.great timing i think

The first fund would buy coal-fired power stations that are burdened by a high cost of capital, and use the fund’s lower cost of capital to settle the power station’s obligations sooner.

from the article:
Premature retirement of power stations could also earn the first fund carbon credits, which could prove lucrative ...

How to provide cheap finance for coal-fired generation without gaining the ire of the CC mob. Fifteen years of guaranteed demand for coal.... works for me!

 

[Garpal Gumnut]

I am not as confident as others here that coal will be phased out in Australia within the mooted timeframes above.

There are many headwinds to replacing coal with cleaner energy, not least living with Covid and its effect on rolling out alternative cleaner alternatives, blocked supply chains and manpower.

Why go to the expense of alternative technology when the present works, if one is beset by a perception of a greater danger than warming. I am not arguing against GW by the way, just how we can realistically change to safer energy.

The Russians and Chinese seem to have got a better handle on this simple probable reality than the West.

gg

 

[Ann]

I am not as confident as others here that coal will be phased out in Australia within the mooted timeframes above.

It was only eleven years ago that Tesla listed on the NASDAQ, 13,300,000 shares of common stock were issued to the public at a price of US$17.00 per share. Look at the uptake of EVs worldwide in such a short time frame. I am sure fifteen years will see us well on the way out of coal. I think the price of coal will see a new burst of energy (forgive the pun) for the short term. Let's see.

Here is the 12-year chart for coal, I am wondering if my yellow rising support/resistance line will offer support for the falling price?

 

[qldfrog]

It was only eleven years ago that Tesla listed on the NASDAQ, 13,300,000 shares of common stock were issued to the public at a price of US$17.00 per share. Look at the uptake of EVs worldwide in such a short time frame. I am sure fifteen years will see us well on the way out of coal. I think the price of coal will see a new burst of energy (forgive the pun) for the short term. Let's see.

Here is the 12-year chart for coal, I am wondering if my yellow rising support/resistance line will offer support for the falling price?

View attachment 133227

Yes sure.indeed what is the actual uptake of EV? .how many EV sold in 2021 vs ice?