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(The opinions expressed here are those of the author, a Reuters columnist.)
SINGAPORE, Feb. 22 (Reuters) – The coal world has been doing silly things in recent days. The largest shipper in the world claimed that it was limiting production, the biggest ocean buyer, China, would impose restrictions on some imports, and an Australian court said mines must take climate change into account.
A leader of a large coal-fired power plant in India told his company that his company would not build new power plants because coal can not compete with renewable energy. It is therefore not surprising that environmental activists are tempted to burst corks.
The common theme at work is that coal is finding it increasingly difficult to secure a long-term future within the global energy mix. But it is useful to describe the different developments and evaluate the likely real impacts beyond public relations.
The most important development this week was Glencore's announcement on February 20 that it would limit its annual production to its current capacity of 145 million tonnes.
The fourth largest mining group in the world, Glencore is also the leading supplier to the marine market, as the miners who produce more – Coal India, China Shenhua Energy and Peabody Energy in the US – are focused on their domestic markets.
Glencore said he was engaging in the fight against climate change, urging commentators and activists to claim a new victory in the campaign to stop the burning of polluting fuel.
A PROFITABLE DEATH
Although Glencore is really trying to do its part to stop global warming, it is also likely that the mining giant has calculated that restricting coal production would be good for business.
It is recognized that coal consumption is likely to decline in the coming decades, virtually zero in Europe and North America, and will even begin to decline in Asia.
But Glencore has probably calculated that it will be a slow and profitable death and is positioning itself to take advantage of it.
Although global coal consumption is important for climate considerations, Glencore is interested in the shipping market, and it is here that business can be good for a long time, even as global coal demand decreases.
The marine market is expected to tighten, particularly in Asia, as more countries in the region build coal generators that rely on imported fuels.
Countries on this list include Malaysia, Pakistan, the Philippines, and other countries in Southeast and Southeast Asia.
The three largest coal exporters in the world, however, have various reasons as to why they might not be able to provide much more than they are now shipping.
Indonesia, the world's largest exporter of thermal coal used in power plants, has a national reserve policy that reduces exports as more and more fuel is used to feed local producers.
Australia, the largest exporter of coking coal used in steelmaking, and number two in thermal coal, may find it difficult to increase shipments due to growing opposition from industry and difficulties to approve, finance and insure new mines.
South Africa, the third largest exporter, has capacity problems with its rail system and is also trying to balance the needs of its domestic market with the opportunity to earn foreign exchange through exports.
Glencore, which spent some $ 3.7 billion last year on coal mines in Australia, has probably also acquired all the badets it needs in the coal sector.
Its mission now is to operate these mines efficiently and to try to keep prices as high as possible.
It may sound cynical, but one way to do that is to say that the company will limit production, helping to keep the marine transportation market under control and driving up prices.
The spaniel of China
China shows that two of them can play this game. The customs authorities of the port of Dalian, in the north of the country, prohibit imports indefinitely from Australia and restrict those coming from. other countries, according to an exclusive Reuters report released Thursday.
This is not the first time China has taken such measures, and the most likely outcome is that imports will decline for a while, but could eventually recover.
Much of Australia's imported coal from China is coking coal, a hard coal to find from other countries, the only real alternative being Canada and the United States.
What is clearer is that China, the world's largest coal importer, wants to limit its total imports, which means that over time, it's unlikely that it's going to be a big deal. It acts of a fast growing market.
India, the second largest importer of coal, is a great hope for the sector, but this week's Coaltrans India conference in New Delhi showed that, even if imports could increase this year and the following year, new projects and the likely improvement in the availability of coal on the domestic market should lead to a contraction of the market.
Newly built coal plants are struggling to compete with wind and solar power in India. Rajit Desai, a senior executive at leading private power generator Tata Power, told the conference that his company was not planning to develop new power plants and would instead focus on buying existing units that are actually distressed badets.
In another apparent victory for climate activists, an Australian court ruled on February 8 that a development of the mine could not continue, citing the impact of the greenhouse gas emissions that would be created.
Although the mine in question would most likely have been rejected for other reasons, such as its proximity to a retirement complex, the court nevertheless indicated that mitigation of climate change could be part of any process. Future approval.
By gathering recent developments, one can get an idea of a fuel destroyed on all sides.
But there is always a warning. In this case, it is simply a matter of the fact that a large number of coal-fired power plants in Asia are still in their infancy and are likely to operate in the coming decades.
The coal may be down, but it is far from exhausted. I'm sure Glencore's wise general manager, Ivan Glasenberg, would agree. (Edited by Tom Hogue)
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