MAC: Mines and Communities

Is US coal set to flow abroad?

Published by MAC on 2011-05-17
Source: Reuters, State Column, NZ Herald

The prospect of a reduction in domestic demand for US coal, as multiple restraints are imposed on mining and use of the fuel, doesn't seem to be worrying some of its bigger mining companies.

They now see a bright future in selling US coal to Asian consumers.

Meanwhile, the scientist who first brought us chilling predictions of global climate change, is reminding audiences in Aotearoa-New Zealand that: "Coal is the single greatest threat to civilisation and all life on our planet." See: Coal is "greatest threat to life on our planet", claims leading scientist

Scientist: Leave coal in the ground

By Isaac Davison

New Zealand Herald

13 May 2011

The "father of climate change" has a stark message for those proposing to mine fossil fuels in New Zealand: "Leave the coal in the ground."

James Hansen, the first scientist to bring global warming to the world's attention in testimony to the United States Congress, is in the country for a series of public talks.

After deciding that an individual scientist could not compete with the influence of fossil fuel companies, Dr Hansen has turned to activism. Much of his criticism focuses on the hypocrisy of governments - which talk green but have few green policies - and the dangers of coal-burning.

Dr Hansen said these problems were relevant to New Zealand.

"This is a beautiful country, but there are some inconsistencies. Pretending to be green, having this pure image, while looking to mine lignite ... is as bad as it gets."

Dr Hansen has just co-written a paper which says emissions reductions of 6 to 7 per cent are needed each year to avoid harmful imbalances in the atmosphere.

If companies continued to dig for every last bit of coal, oil, and gas, this goal was impossible, he said.

"As long as fossil fuels are the cheapest energy, we will continue to burn them. That is as certain as the law of gravity.

"The reason that they are the cheapest is because they are not made to pay for their cost to society - around one million deaths a year from air and water pollution, mostly from fossil fuels."

He proposes a "simple, honest, across-the-board" carbon tax, in which the revenue returns to the public as a dividend.

He said cap-and-trade schemes overseas had been engineered to favour big business.

Here, a Consumer NZ study has found that taxpayers, not big polluters, will bear the brunt of the Emissions Trading Scheme.

"The money collected should be distributed on a per capita basis, because then the person who does better than average in limiting their fossil fuels will actually make money."

Dr Hansen said that if the tax was increased sharply, dependence on fossil fuels would become unsustainable, and cleaner energies would push into the market.

"The prescription is simple. It is what we need to do if we are to solve the climate problem."

During his visit the Nasa director will attend a symposium on coal in Wellington, and also visit the site of proposed lignite developments in Southland.

While he has been criticised as an alarmist, Dr Hansen says the matter of cutting emissions is one of great urgency. If no progress is made in the next decade, he believes that governments will have to introduce highly expensive geo-engineering.



"Coal is the single greatest threat to civilisation and all life on our planet."

Analysis: U.S. to be a top coal exporter again, thanks to Asia

By Bruce Nichols and Jackie Cowhig


12 May 2011

HOUSTON/LONDON  - The United States could vault back into the top rank of coal exporters for good this year thanks to Asia's fuel demand -- just as surging gas output and tougher environmental laws threaten mainstay domestic sales.

Leading U.S. producers, with wallets bulging from high world prices, are jostling to boost their Asian presence.

Their only problem is squeezing enough coal through over-stretched ports and railroads, but efforts are underway to open new outlets thanks to surging confidence in the sector.

"We see it as a structural change," said Deck Slone, chief spokesman for Arch Coal Inc, the second largest U.S. producer after Peabody Energy Corp.

Arch has agreed to buy International Coal Co and has opened a Singapore-based subsidiary to boost its export presence.

Analysts say total U.S. coal exports could amount to around 100 million tons (91 million tons) this year, leaving only Australia and Indonesia above it in the world export rankings, and putting it above Russia, Colombia and South Africa.

It exported 81.5 million tons in 2010. A short ton is 0.907 metric tons, the latter used in markets outside the U.S.

The economic boom in China and India has been the driver, but the developing world is also turning more to the United States to make up for supply shortfalls, particularly buyers who want very high energy-content U.S. fuel regardless of its high-sulphur content.

Miners in the U.S., the world's second-largest greenhouse gas emitter, have been hit by weak domestic coal sales and fear President Barack Obama's tough climate change policies will further cut coal demand.

"U.S. policy toward coal has been negative," said analyst David Khani of FBR Capital Markets. "Add having extra natural gas and every coal producer wants to ship every ton they can out of the U.S."

The opening up of the export market puts them in a more profitable, long-term position.

U.S. miners are now rushing to open Asian marketing offices and to merge, amalgamate and expand their output with their eyes on the export prize.

Good Times

Annual U.S. coal exports have hit or exceeded 100 million tons only six times in the last 50 years. Exports have been sporadic depending on international prices and freight costs.

But world prices of over $100 a ton (more than $110 a ton) seem here to stay due to strong demand, logistical bottlenecks and slow export growth in major producers this year.

Increased U.S. exports are unlikely to bring prices lower, traders say, but will compensate for delayed coal from Australia and will be smoothly absorbed by the Asian market.

This could not come at a better time for U.S. coal miners who face slow-growing domestic consumption amid tough environmental rules and competition from plentiful, cheap, cleaner natural gas surging from new shale plays.

Optimism dominated analyst conference calls to discuss quarterly earnings as coal company executives forecast historic shifts and big growth.

Arch executives noted that, while 35 gigawatts of U.S. coal-fired generating capacity, 11 percent of the total, could be shut down in the next 10 years, 249 gigawatts of new coal-fired power plants are under construction worldwide.

"This is going to require almost 800 million tons of new coal supply during this time period," Arch President John Eaves told investors.

Total seaborne thermal and coking coal trade in 2009 was 1 billion tons a year, according to the World Coal Association.

"Coal is expected to fuel more incremental generation over the next decade than gas, oil, nuclear, hydro, geothermal and solar combined," Greg Boyce, CEO of Peabody Energy, told investors.

"It's something unprecedented in human history, arguably, 3 billion people going through an industrial revolution at the same time," Arch's Slone said.

Straining Infrastructure

To a large extent fluctuating freight rates dictate whether U.S. coal exports are competitive with other coal origins.

Another risk is limited U.S. rail and port capacity.

Although nameplate capacities are higher, practical U.S. export capacity is estimated at a maximum of 120 million tons.

"Finding international buyers isn't the problem," an industry insider said. "The bottleneck in the supply chain longterm will be getting the transportation secured."

U.S. coal is already flowing in every direction, and many of the routes are new.

Ports on Chesapeake Bay, at Mobile, Alabama, and the lower Mississippi River around New Orleans, are at maximum capacity.

New flows are coming to Corpus Christi and Houston, Texas, on the Gulf Coast.

A test cargo has been sent across the Great Lakes and down the St. Lawrence River to Europe. Arch is exporting small amounts of Colorado coal through Long Beach, California, a past coal export site that fell into disuse.

Other U.S. coal is flowing into the Pacific Basin from Vancouver and the newer port of Prince Rupert in northern British Columbia, both in Canada. U.S. steam coal is even going to usually self-sufficient South America.

Canadian National Railway's terminal upriver from New Orleans is turning away calls from producers who cannot find a way out, terminal president Bruce Conti said.

More tonnage is going to midstream Mississippi River operators, who use cranes floating in the middle of the river to transfer coal from domestic barges to ocean going ships.

"We're doing more coal than we've ever done historically," said John Crane of St. James Stevedoring in New Orleans.

(Reporting by Bruce Nichols and Jackie Cowhig, editing by William Hardy)

Washington becomes the first state to ban toxic coal-tar pavement sealants

The State Column

7 May 2011

At a bill-signing ceremony in the state capitol on Thursday, Washington became the first state in the nation to enact a statewide ban on a type of pavement sealant that has been linked to fish kills, cancer risks and toxic contamination of lakes and streams.

Gov. Chris Gregoire signed a law proposed by Rep. David Frockt (D-Seattle) that prohibits sales of coal-tar pavement sealants after June, 2012, and bans their application the following year.

"This is pretty noxious stuff for health and our environment, and since safe alternatives are readily available there is really no reason for using coal-tar sealants," said Frockt, the lead sponsor of House Bill 1721.

Coal-tar paving sealants are marketed as a shiny black coating for asphalt driveways, parking lots and playgrounds. But unlike rival asphalt-based sealants, the coal-tar products are saturated with high concentrations of toxic compounds called polycyclic aromatic hydrocarbons (PAHs).

According to the U.S. Geological Survey (USGS), coal-tar sealants have PAH levels that are 1,000 times higher than asphalt alternatives.

PAHs are probable human carcinogens and have been tied to cancers, reproductive problems, and deformities in fish and other aquatic organisms. Weather and normal use cause particles of these compounds to dislodge from the sealant and enter the environment as stormwater runoff that washes into lakes and streams or as dust that can be inhaled or tracked into homes.

"Washington's first-in-the-nation ban on coal-tar sealants is a big step forward to ensure we are protecting children's health and the environment from harmful water pollutants," said Mo McBroom, Policy Director for the Washington Environmental Council. "Cleaning up this toxic substance is expensive-it's much better to prevent the contamination from happening in the first place."

USGS scientist Peter van Metre told state lawmakers in hearings on Frockt's bill that coal-tar sealants are the leading cause of rising PAH levels in 40 American lakes that were studied, including Lake Washington and Lake Ballinger in Washington state.

Last July, a rainstorm washed a fresh coat of coal-tar sealant from a parking lot and killed all aquatic life in a 1.5-mile section of Hodges Creek in North Carolina.

Van Metre also reported that house dust in apartments located near coal-tar sealed parking lots had PAH levels that were 25 times higher than dust from apartments near parking lots that had other kinds of surfaces.

Although today's bill signing makes Washington the first state to ban coal-tar paving sealants, the product has been banned locally in places such as Austin, Texas and Washington, D.C. The chambers of commerce in both of these two cities told Frockt that none of their local businesses had reported any problems or adverse impacts from the local bans.

In Washington State, a number of leading retailers, including Home Depot and Lowes, have voluntarily stopped selling coal-tar sealants because of the toxic risks.

The Washington state Department of Transportation has also stopped using coal-tar sealants. In a Feb. 11 letter to Frockt, state materials engineer Thomas E. Baker said the coal-tar products are no longer used because "asphalt based products are comparable in performance and price, and do not pose the environmental risks that have been associated with coal-tar emulsions."

Frockt's measure passed the House, 64-32, and the Senate, 36-12.

"I'm proud that Washington is a national leader in environmental protection, and proud that we're building on that tradition today," said Frockt.

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