Australian Coal Report

coalportal.®com
ISSUE 0505 10 July 2013 www.coalportal.com

Newcastle spot price This week’s Australian Coal Report

includes the monthly port statistics
steadies to weak market BRIEFS
By John O’Neil
Atrum finds more Canadian coal
The threat of strike action by workers of Colombia’s second largest ASX-listed coal developer Atrum Coal has intersected thick
coal miner Drummond has seen a slight rise in European spot market shallow coal seams at its flagship Groundhog Anthracite
prices this week. Even if the strike does eventuate, which will reduce Project in British Columbia, Canada.
Colombia’s coal exports by at least 2.2mt a month, it is unlikely to   A drilling program targeting the s70 seam encountered
provide more than a temporary halt to the price slide with Europe net coal thickness of 6.8m at a depth of 30.4 to 42.2m depth
seriously oversupplied with coal. and a net thickness of 3.4m at depths of 10.65 to 19.1m in
  Drummond and the union representing the workers the north-west area of the project. Atrum plans to extract
Sintramienergética failed to reach an agreement on a new three-year a 300kg bulk sample to confirm the product specification
labour agreement by the deadline of July 8. Workers have until July at Groundhog which includes premium grade anthracite
17 to vote for strike action or seek arbitration although new talks and premium grade ultra-low volatile PCI for use in steel
between Drummond and the union will begin on July 11. manufacturing and ferro industries.
  If Colombia’s supply disruption in March this year as a result of strike
action by workers of the country’s largest miner Cerrejón and the ban Yanzhou lobs take over for Yancoal
on Drummond coal shipments is any indication, the possible strike
action is unlikely to have any impact on prices in Asia, although it A year after a local stock exchange listing of its Australian
may halt the low volumes of Colombia coal which have recently been operations, China’s Yanzhou Coal Mining Company is
leaking into the Asian market, a Brisbane-based trader said. proposing to take them private.
  Two prompt physical trades of Newcastle coal were settled on   The Hong Kong-quoted but Chinese state-controlled
globalCOAL on July 9 – a 75,000t cargo for October delivery at Yanzhou has announced an all-paper offer for the 22% of
US$77.50/t FOB and 25,000t trade for September delivery at $77/t its Australian offshoot it does not control. But both Yanzhou
FOB. With prompt physicals settled in the range of $76.10 to $77/t last and Yancoal said the proposal - offering securities known
week, this week’s trades may indicate the Newcastle spot prices may as CDIs in Yanzhou - was non-binding and subject to a
be “nearing the bottom”, he said. complex web of scrutiny and approvals.
  However, a Sydney-based trader said he wasn’t “brave enough   Yancoal said its independent directors would initiate
to call where the floor in Newcastle prices may be”. The Newcastle discussions with Yanzhou and seek an independent
globalCOAL trades this week were still at a reasonable discount to the valuation of the Australian company in a process expected
prevailing swap prices, so the spot market could still decline further, to take several months. Yanzhou said its proposal was worth
he said. A$0.91c a share and this represented a 30% premium to
  Port Waratah Coal Services’ terminals at Newcastle continue to show recent market quotes. Yancoal shares have lost about 30%
no signs of reducing export volumes, despite rolling strike action by of their value since early 2013, in line with a number of
PWCS workers, a good indication that NSW producers are still pushing quoted Australian coal companies.
coal into an already saturated Asian market.   Yanzhou said a successful takeover would allow the
  “Large take-or-pay obligations will obscure cash cost limitations on Chinese company to achieve deliver higher efficiency
production,” the trader said. across a “highly integrated business”. Yancoal is one of the
  “No-one is talking about cutting production yet.” most diverse coal producers in Australia, with output of
  The Brisbane trader said there was plenty of Newcastle coal around 16.5mtpa in several met and thermal categories.
available to the spot market which could be had for about $76/t FOB   The proposal has also brought speculation that Yanzhou
or lower but there were few buyers as end users were well stocked. may seek to list its wider operations on the Australian stock
  “This is traditionally the quiet period,” he said. exchange as part of a plan to gain foreign investment
clearance for the takeover.
IHS McCloskey Weekly prices
FOB markers grade 5-Jul-13 28-Jun-13 21-Jun-13 Jun-13 Resgen signs new offtake
High Ash 5,500 5,500kc NAR 67.45 69.20 70.55 71.55
Differential 6,000kc NAR 2.45 2.07 3.88 5.01 ASX-listed Resource Generation has simultaneously
Spreads cancelled a 0.5mt offtake agreement with Indian company
FOB Spread (Newc/RB)
FOB Spread (Newc/RB)
6,000kc NAR
5,500kc NAR
3.62
0.85
3.55
1.30
4.65
1.45
4.89
1.57
Bhushan Steel and signed a new deal with another Indian
Washspreads investor.
Simple Washspread 6,000kc NAR -9.32 -9.59 -8.24 -7.80   Resgen is developing the Boikarabelo mine in South
Logistical Washspread 6,000kc NAR -5.32 -5.59 -4.24 -3.80 Africa’s Waterberg region, due to start in 2015 at 6mtpa
Logistical washspread assumes $3.50/t washing cost 20% yield loss and $20/t port and rail fees
output before lifting to 25mt in stage 2.
FOB spread is differential of Newcastle minus Richards Bay, for both 6,000kc NAR and 5,500kc NAR
 Australian Coal Report
BRIEFS CONTINUED
  Resgen and special investment vehicle Valu Investments
Pte. Ltd have entered into a 20-year export coal offtake
contract for 1mtpa once production starts at the
Boikarabelo mine. Once stage 2 production kicks off, the
volume increases to 2mtpa.
  Valu will also conduct feasibility studies for the
development of both a 200MW power station and
a 1200MW coal-fired power station adjacent to the
Boikarabelo mine.
  Resgen has granted Valu the right to own, build and
operate both power stations as an independent project.
  Indian company CESC has pulled out of its option to
explore setting up a power plant but will still take coal under
an earlier offtake agreement.
New Age coking coal potential in Scotland
Washability test work on coal extracted from the first
drill hole at ASX-listed New Age Exploration’s Lochinvar
metallurgical coal project in Southern Scotland indicates the
potential for a low ash and low phosphorus metallurgical
coal with good yields.
  The maximum fluidity of these coals is high and could
provide a suitable blend for coals of lower reactivity, the
company said.
Abbot Point deadline extended
Federal environment minister Mark Butler has extended
the deadline for assessing plans to expand Abbot Point
coal terminal near Bowen in North Queensland, according
to ABC News. The July 9 deadline has been extended for a
further month.
  In a statement Butler said he needed more time to
consider the project’s potential impacts and hear the views
of interested parties, particularly those who had concerns
about the effects of dredging and dumping 3 cubic metres
of spoil out to sea.
  “It is not unusual to have short extensions for the
assessment of large and complex projects like this one,” he
said. “The initial statutory timeframe for federal assessment
applies equally to all projects, whether it’s a small housing
development or a larger project like this.”
  Mr Butler said a decision could be made before August
9 if he was satisfied with the information put to him by
interested parties.
Algae.Tec signs biodiesel deal
Algae.Tec has contracted with Biodiesel Industries Australia
(BIA), to refine algal oil from its carbon capture and biofuels
production facility alongside the 2640MW Bayswater coal-
fired power station near Sydney.
  The oil, to be produced from the Algae.Tec facility planned
for 2014 at the Macquarie Generation power station, will be
refined by BIA then used locally by mining and industry in
the Hunter region. BIA MD Andrew Hill said the company
produced biodiesel for clients including Caltex, local
councils, and the mining industry.
  “We have long considered algae to be the Holy Grail for
biofuels, so we are pleased to see this new algae to biofuels
development happening just up the road at MacGen,” he
said.
  With Chinese buyers also most absent from the market for spot
market the Newcastle high ash 5,500kc NAR coal, its price is also
now falling quite quickly. The Sydney trader said HA 5,500kc coal
was now being offered at $66.50/t FOB with little interest from
buyers.
  Further complicating the ability to settle deals is the issue of
distressed cargoes with a number of vessels reported off the east
coast of China with coal unable to find a home.
  “Credit constraints in China are forcing Chinese traders to re-offer
previously purchased cargoes into the market as they can’t open L/
Cs (letters of credit),” the Sydney trader said.
  The Brisbane trader said most producers and sellers were looking
very closely at their Chinese counter parties and were only willing to
sell to those they had dealt with previously.
  To add to Australian producers’ problems, the Newcastle HA
5,500kc NAR coal is coming under increasing price pressure from
the domestic product. The spot price of the domestically produced
5,500kc NAR coal at the benchmark Chinese port of Qinhuangdao
continues to fall, down RMB 12/t (US$1.95)over the past two weeks,
to RMB 581/t($94.70/t) FOB on July 5.
  A Singapore trader said the price is expected to fall a further RMB
20/t ($3.25/t) over the next several of weeks which would price
imported coal out of the Chinese market.
Coal exports grow 10.7%
By John O’Neil
In the first six months of 2013, Australian’s coal export volume grew
by 10.7% or 32.3mt to 334.1mt, despite coal prices being much
lower than those of the previous financial year.
  Queensland’s contribution to the total was 180.1mt, up 9.2% year-
on-year, while NSW exported 154mt of coal, an increase of 12.5%
y-o-y supported by increased capacity at both the Port Waratah Coal
Services (PWCS) and the Newcastle Coal Infrastructure Group (NCIG)
terminals at Newcastle.
  The largest increase in export volume, apart from the expanded
NCIG terminal, came from Dalrymple Bay Coal Terminal (DBCT)
which shipped 62.4mt
The largest increase in export of coal in FY2012-13,
volume, apart from the an 11.5mt increase on
FY2011-12 when the
expanded NCIG terminal, Bowen Basin mines were
came from Dalrymple Bay still recovering from
Coal Terminal (DBCT) which the rains and floods of
shipped 62.4mt of coal in December 2010 and
early 2011.
FY2012-13.   DBCT’s FY2012-13
throughput was just
short of its FY record of 63.4mt achieved in FY2009-10. The 85mtpa
capacity terminal operated at 73% of its nominal capacity during
the financial year just passed.
  The BMA-operated Hay Point Coal Terminal (HPCT) exported
34.1Mt of coal in FY2012-13, an increase of 2.1mt, but short
of 36.3mt exported in FY2009-10 - the previous time when
Queensland was relatively free of severe weather events. The
44mtpa HPCT operated at 77% of its nominal capacity in FY2012-13.
  The Adani-owned Abbot Point Coal Terminal (APCT) increased
its export volume by 4.1mt y-o-y to 17.7mt. The previous highest
volume was 16.9mt in FY2009-10 but the terminal has since
doubled its capacity from 25mtpa to 50mtpa which was available
for all of FY2012-13.
Australian Coal Report Issue 0505 10 July 2013 2
 Australian Coal Report
BRIEFS CONTINUED
  “BIA is playing a key role to accelerate the transition to
biofuels in the region.” BIA was established in 2003 and is
refining up to 17m million litres a year.
Carabella upgrades Bluff resources
ASX-listed coal explorer Carabella Resources has updated the
JORC resource estimate for the Bluff project in Queensland’s
Bowen Basin from 18.2mt to 21mt. There has been a 70%
increase in indicated resources from 6.6mt to 11.2mt.
  An exploration target in the range 3.4mt – 24mt has also
been identified. The PCI project is 20km east of Blackwater
and adjacent to the Gladstone rail line.
Aviva shareholders approve Mmamantswe
Aviva Corporation shareholders have voted in favour of
selling the 1.3bt Mmamantswe coal project to African Energy
Resources for A$3.5m cash.
  This satisfies the final condition for the Mmamantswe
project acquisition by African Energy.
  Aviva told the ASX Sentient Executive GP IV Ltd, acting for
Sentient Global Resources Fund IV, L.P. would now subscribe
for a further $3.5m of African Energy shares at $0.12 each.
  “On completion, African Energy will have secured the full
rights to 3.8bt of coal in Botswana and maintained its working
capital at approximately $6m,” Aviva said.
  “At conclusion, Sentient will own approximately 17.4%
of the issued shares in African Energy and will be the single
largest shareholder.”
Strategy to attract more women to resources
Queensland Education Minister John-Paul Langbroek has
launched a strategy to increase female participation in the
resources sector.
  “The resource sector is one of the state government’s four
pillars and a key Queensland industry that has traditionally
experienced difficulty engaging and retaining female
workers,” he said during a visit to the Myne Start simulated
underground mine in Mackay.
  “That’s why the government is contributing $100,000
annually over three years to support the Women in Resources
Sector Strategy, to attract and retain female workers in the
industry.
  “The strategy funds the Queensland Resources Council
to deliver the Women in Mining and Resources Queensland
(WIMARQ) Women’s Mentoring Program that involves four
months of face-to-face training each year to develop the skills
of 20 mentors and 20 mentees.”
Less regulation creates jobs - ACA
The Australian Coal Association has welcomed the federal
coalition’s commitment to reduce regulation and boost
productivity as a positive step to encourage investment and
drive jobs in the coal industry.
  “The industry welcomes the coalition’s commitment to
reduce Australia’s red and green tape,” said CEO Dr Nikki
Williams.
  “We’ve seen regulations steadily increase in Australia. Extra
regulation brings higher costs and delays in project approvals,
which in turn deters investors and threatens Australian jobs.”
  The combined throughput of Gladstone’s RG Tanna and Barney
Point terminals declined 2.5mt y-o-y to 57.3mt in FY2012-13 as
a result of the closure of the Blackwater and Moura rail systems
earlier in 2013 because of track damage and flooding.
  The combined 76mtpa capacity terminals still managed to
achieve 75% efficiency.
  Exports from the New Hope’s Queensland Bulk Handling (QBH)
facility at the Port of Brisbane declined marginally from 8.7m in
FY2011-12 to 8.6mt in FY2012-13.
  Exports for both years were impacted by the closure of the
Western rail line due to washouts on the Toowoomba Ranges
which prevent coal being transported from the Surat Basin for
several weeks in January 2013 and several months from January
2012. However, the 10mtpa capacity terminal was able operate
at 86% of its nominal
NCIG also benefited from capacity in FY2012-13.
a nameplate capacity   In NSW, Port Waratah
Coal Services increased
expansion which increased exports by 6.2mt
from 30mtpa to 53mtpa in y-o-y in FY2012-13 to
July 2012. 108.5mt supported by
a nameplate capacity
increase from 113mtpa
to 133mtpa. Of the total exports, 85% or 92.5mt was thermal coal
and the remaining 16mt was semi soft coking coal.
  Weak coal demand meant PWCS wasn’t able to take full
advantage of the 20mtpa capacity expansion and the combined
Kooragang and Carrington terminals operated at only 82% of their
combined nominal capacity.
  NCIG also benefited from a nameplate capacity expansion which
increased from 30mtpa to 53mtpa in July 2012.
  NCIG’s exports have grown from 20.1mt in FY2011-12 to
32.3mtpa in FY2012-13.
  Port Kembla Coal Terminal (PKCT) throughput fell by 1.3mt in
FY2012-13 to 13.2mt mainly due to adverse weather conditions
which closed the port of several occasions and electric and
mechanical problems with the shiploader. The 18mtpa PKCT
operated at 73% of its nominal capacity and exported 8.2mt of
coking coal and 5mt of thermal coal in FY2012-13.
GVK Hancock push eco-
friendly coal
By Jack Saunders/John O’Neil
Indonesian miner, Adaro, did a great job marketing the
environmental benefits of its low-ash, low-sulphur coals when
launched to market a few years ago.
  Now, GVK-Hancock is doing something similar and pointing out
the benefits of the Galilee basin coal it is developing for export.
  Working with GVK, leading Australian coal power researcher
Lindsay Juniper, has written a paper demonstrating how both the
environment and power station performance can be improved by
utilising better quality and relatively cleaner burning coals.
  Global trends have increasingly moved to lower qualities,
increasing the volume of pollutants from coal burning and to
reverse the trend in coal quality deterioration a new, large volume
source is required.
  Juniper claims one of the best credentialed prospects for
replacing China’s high ash, low rank domestic coal with high rank,
low ash imported coal is the Galilee Basin.
Australian Coal Report Issue 505 10 July 2013 3
 Australian Coal Report
  Chris Hartley, general manager marketing GVK Hancock said:
“We have been banging on for years about coal quality impacts
on power station boiler efficiency. As quality improves less
coal is needed to be mined, less coal needs to be transported
to exporting ports, less coal needs to be transported from
destination ports to the power stations and less coal needs to be
burnt. All of these contribute to a better environmental outcome.
  Hartley said coal with ash content above 20% caused power
stations to emit more particulate matter into the atmosphere
than if they used a lower ash coal.
  “The higher the level of impurities, the less the energy content
in the coal and the higher the volume consumed to achieve
required power station outputs.
  “Substituting low rank, high ash Chinese domestic coal with
high rank, low ash Australian alternatives such as those planned
to be exported from the Galilee Basin will result in less emissions
in terms of actual particulates per tonne burnt. As well it will
allow lower tonnages to be transported and burnt to achieve
equivalent power station output,” he said.
  Hartley contends coal pricing has not moved in relation to the
real, embedded value in individual coals, if one considers the
impact the coal has on all of the purchase, transportation and
utilisation costs involved in producing a unit of electricity.
  “This is achieved by measuring the coal’s ‘value-in-use’.
This calculates the impact of coal properties on the technical
performance of the coal and their influence on costs within the
power station including costs that relate to mitigation of any
environmental impacts.”
  Measuring value-in-use is achieved by modelling which
simulates the performance of a modern super-critical power
plant.
  “Such modelling measures the impact of coal properties on the
utilisation performance of the coal and the subsequent impact
on costs within the power station,” he said.
  “These can be compared with the costs incurred by simulating
the burning of other coals to estimate their values relative to
each other.”
  “Here, we compared a medium rank, export quality bituminous
coal, such as that from the Galilee Basin, with a domestically
produced low rank, high ash, high moisture coal that might be
used in a Chinese power plant.
  “Thus, if the cost of Chinese coal delivered to the plant
stockpile was US$40/t (say), then the electricity generator could
afford to pay up to US$88/t for the high rank, low ash coal
without exceeding his current cost of electricity production with
BANDANNA SELLS EQUITY IN WICET HOLDINGS
Queensland coal developer Bandanna Energy has added to
its cash reserves by selling its preference equity in the WICET
Holdings (WIPS), the developer of the Wiggins Island Export
Coal Terminal (WICET) at Gladstone
  Bandanna made a net gain of $6m after initially investing
S41m in WIPS in September 2011 as part of the funding
required to begin construction of the $2.5b WICET Stage 1
project.
  Bandanna’s sale of the WIPS equity to a global infrastructure
investor will not impact its 4mtpa port allocation for the
Springsure Creek project in the 27mtpa capacity WICET Stage 1.
  Bandanna will also maintain its 14% shareholding in the
Stage 1 development which is expected to begin exporting first
coal in early 2015.
  Funds raised from the sale increases Bandanna’s cash
reserves to $121m, of which $23m is committed as security
the Chinese coal.
  “When comparing the costs of electricity generation using a
low rank coal with that of a high rank, low ash coal, the value-in-
use price difference is greater than the pro rata difference in price
based solely on energy content, meaning the poorer quality coal
is generally being over-priced.”
  Hartley said this distortion could be seen in the price of poor
quality Indonesian coal.
  “The market price for the Indonesian 4,700kc is about US$67/t
using the price per unit of energy, but if you use a value-in-use
analysis, you should be paying about $42/t,” he said.
  Hartley admits that it is an uphill battle to change what he
describes as “a fairly ingrained mindset in the industry” towards
the value-in-use price analysis, particularly among power
generators which have separate purchasing units.
  “We are trying to get companies which buy coal for electricity
generation not to think in dollars per unit of energy but the cost
per unit of electricity,” he said.
  “China’s five largest utilities have separate companies –
one which buys the coal and the other which generates the
electricity. For the coal purchasing company, their KPI is all about
buying the cheapest coal available.”
IEC commits to power
Tanzania and Malawi
By Jack Saunders
In 2011 the International Monetary Fund (IMF) listed five eastern
African nations (Uganda, Rwanda, Mozambique, Tanzania and
Malawi) as being among the world’s fastest growing countries
during 2005 to 2010.
  Two of them – Tanzania and Malawi – are united in their
intention to exploit their considerable coal reserves to provide
the power to fuel the growth needed to break the chains of
poverty holding back their people. Some 36% of Tanzania’s
population live below the poverty line while Malawi’s proportion
is 53%.
  Tanzania has just revised its estimates of its coal reserves up to
5bt from 1.5bt. Malawi’s budding coal exploration program has
already identified five coalfields with estimated reserves of 20mt
and 750mt of probable reserves.
against infrastructure contracts. Part of the funds will be applied
to the mining lease approval process for the Springsure Creek
project in the Bowen Basin, as well as land acquisition and
compensation, and further optimisation studies to further
reduce the project’s capital and operating costs, Bandanna
managing director Michael Gray said.
  “With port construction now more than 60% complete,
Bandanna Energy considers that those funds would be better
applied directly towards continued progress of development of
Springsure Creek,” he said.
  “The investment in WICET preference equity by the acquiring
party, a global infrastructure investor, demonstrates the
investment market’s understanding and confidence that WICET
Stage 1 will facilitate the growth of Queensland’s coal export
market in line with our forecasts for an increase in the demand
for Queensland thermal coal by 2015.”
Australian Coal Report Issue 0505 10 July 2013
4
 Australian Coal Report
  Sydney-based ASX-listed Intra Energy (IEC) has established a
growing footprint in the two countries and has already forged
memorandums of understanding with both governments to
develop coal-fired power stations.
  The mining junior has two coal mining projects on the go –
Tancoal in Tanzania and Malcoal in Malawi – and another project
– Tanzacoal – in the development stage.
  IEC’s flagship thermal coal project is the Ngaka mine,
owned 70% by Tancoal and 30% by the state-owned National
Development Company, which has an operating capacity of
0.36mtpa out of JORC resources of 423mt.
  The company’s marketing wing has been working overtime
lining up sales contracts in Tanzania, Uganda and Kenya which in
turn will significantly lower the production cost per tonne. While
the price to customers on the coast is elastic to Richards Bay
pricing, prices to inland customers are inelastic.
  Product from Ngaka attracts about A$54/t at the mine gate
and production costs are targeted to fall from #35/t to $25/t
once production is ramped up to full capacity and haul road
improvements are finalised. Industrial demand for coal is growing
about 20% a year.
  A bankable power purchase agreement (PPA) with Tanzanian
power utility TANESCO will allow IEC to sponsor a US$400m
mine-mouth power
As IEC moves from a contract station, expected
mining arrangement to its own to provide 200MW,
scalable via
controlled process capacity modular additions,
will be lifted to 0.15mtpa beginning in early
significantly reducing the cost 2018.
  The government
of production.
is keen to get
away from the
heavy weighting of
hydropower in its generation profile and recognises coal-fired
generation is a reliable and affordable base load source that is
not subject to climate-driven variability.
  IEC and TANESCO are close to finalising the PPA which ensures
payments for power produced will be paid in US dollars and are
guaranteed by governments or other guarantors such as the
World Bank, African Development Bank or export credit agencies.
  Meanwhile in Malawi the Nkhachira coal project, 90% owned
by Malcoa and 10% by a local entrepreneur, is operational and is
expected to produce 0.045mt of coal in 2013-14.
  As IEC moves from a contract mining arrangement to its own
controlled process capacity will be lifted to 0.15mtpa significantly
reducing the cost of production.
  Three size fractions are sold by the mine (fines, mids and
coarse) and sales currently average US$70-75/t at the mine gate
while production costs come in at $40/t which should go down
to $25/t once the company introduces new mining equipment.
  IEC plots industrial coal demand in Malawi at 0.12 to 0.15mtpa
while markets in Zambia are estimated to take a further
0.24mtpa.
  An MOU with the Malawi government will allow IEC to sponsor
the 120MW Pamodzi coal-fired power plant which will be fuelled
by a mix of Malawian coal and product barged across Lake
Malawi from the Tancoal mine in south-west Tanzania.
  The company is conducting a bankable feasibility study of the
project and aims to have the plant operational by early 2017. IEC
is also negotiating a PPA with the power utility, Electricity Supply
Corporation of Malawi, hoping to finalise it before the end of this
year.
Australian Coal Report
  Progress on all fronts has been streamlined thanks to the
company’s strong engagement with both the Tanzanian and
Malawian governments allowing IEC to emerge as an eastern and
central African integrated mine-power operator.
  IEC recently contracted consultants Optimine to undertake,
with IEC’s own staff, a strategic resource review of the company’s
portfolio of coal resources. Key targets include the delineation
of reserves at Ngaka, delineation of a maiden resource in Malawi
and the expansion of sales and production of industrial coal.
Tenders
 Korea East-West Power (EWP) has issued three term
requirements and one spot tender for various power plants
with a deadline for offers of July 12. In the spot tender, EWP
is seeking 0.28mt of 4,600kc NAR min material for its Dangjin
Power Plant for delivery in August and September. The first of
the term tenders calls for 0.28mt of 5,100kc NAR min coal in the
first year, with shipment in September and October, and a further
0.14mt in each of years two to five of the contract, through to
October 2017, on a fixed price FOB basis. Under the second term
tender, EWP is again calling for 5,100kc NAR min product in
the same quantities and time frame as the first tender, with the
difference to the earlier tender being the requirement for prices
on a premium number US$ or discount number US$ against
globalCOAL’s Newcastle index, based on a 6,000 NAR basis, FOB
only. The final term requirement covers 3,800kc NAR material
on a FOB basis, with the need for 0.14mt in the first year of the
contract and 0.28mt in each of year two to five of the agreement
which will run to October 2017.
 Karnataka Power Corporation Limited (KPCL) has invited bids
for supplying 1.5mt of imported steam coal for blending purpose
at their Raichur facility in central India. The selected supplier
should supply the coal over 12 months. The scope of the work
includes arranging for dispatch of coal from coal mines abroad to
the unloading port in India and unloading the coal. The supplier
would be required to facilitate and cooperate with third party
sampling and analysis of imported coal at loading port and
unloading port.
 South Korea’s generators have launched a joint tender for
0.7mt of low c.v. coal for delivery from September to November,
2013 with deadline for offers of July 16. Issued by Korea Midland
Power (Komipo) on behalf of the five utilities, the tender outlines
a requirement for 4,600kc NAR min material in 10 panamax
shipments destined for the Boryeong, Yeonghung, Samcheonpo,
Taean, Hadong and Dangjin power plants. Material with a total
max moisture of 28%, max ash content of 17% and max sulphur
content of 1% is being sought.
 Taiwan’s Formosa Plastics Group (FPG) has issued two more
tenders for bituminous coal, bringing total new solicitations this
week to 0.67mt. Closing date for all tonnage is July 15. The latest
two tenders separately call for 0.2mt and 0.3mt of minimum
5,850kc GAR material for delivery in August and September this
year. They are unusual for FPG - calling for delivery to Houshi
port, Zhangzhou, China, with offers allowable in US$ or remimbi.
The specs allow ash up to 22%, with panamax vessels specified.
The tenders were issued Tuesday along with two other tenders
separately reported by McCloskey’s Newswire and seeking 0.3mt
of minimum 6,000kc GAR material and 40,000t of minimum
5,500kc GAR product for August/September delivery.
Issue 0505 10 July 2013 5
 Coal Chain Australia
NEWCASTLE
Port Waratah Coal Services (PWCS) terminals at the Port
of Newcastle had a throughput of 2.465mt for the week
ending July 9, an increase of 0.208mt week-on-week. The
combined 133mtpa capacity Carrington and Kooragang
terminals operated at 97% of their nominal weekly
capacity.
  In July 2012, PWCS had an average weekly throughput
of 2.245mt.
  PWCS’s shiploading month to date annualised rate was
128.9mt and YTD annualised rate of 108.29mt. PWCS has a
shiploading target of 136.9mt for 2013.
  The PWCS ship queue had 20 vessels, an increase of
seven vessels w-o-w, with three vessels off shore with all
coal assembled at the port. The optimal number of vessels
in PWCS’s ship queue is 20-23 vessels.
  The average forecast wait time for vessels in the queue is
5.72 day, up from 3.28 days of the previous week.
  The Hunter Valley Coal Chain Coordinator (HVCCC)
estimates PWCS’s ship queue will have 10 vessels at the
end of July based on current terminal demand, a decline
of three vessels from its estimate of the prior week. July’s
nominations for PWCS are currently 10.8mt.
  The HVCCC estimates PWCS’s ship queue will have 12
vessels at the end of August.
  PWCS has been notified of the arrival of 32 vessels to
load 2.898mt, up from 24 vessels of the previous week.
Forward nominations generally number about 20 vessels.
PWCS coal stocks were at 1.262mt, down 0.233mt w-o-w,
and approaching the normal levels of 1-1.2mt.
  Meanwhile, the NCIG ship queue has three vessels, an
increase of two vessels w-o-w, with an average forecast
waiting time of 3.3 days, up from 2.6 days of the previous
week.
WEEKLY LOADING RATES NEWCASTLE (Mt)
Newcastle weekly loading rates
loading rates current port capacity
2.8
2.6
2.4
2.2
2.0
Mt
VESSEL QUEUE NEWCASTLE
Test
24
14
4
PORT WRAP
DALRYMPLE BAY
The Dalrymple Bay Coal Terminal (DBCT) throughput for the
week ending July 8 was 1.506mt, an increase of 0.068mt week-
on-week. The 85mtpa terminal operated at 92% of its nominal
weekly capacity. In July 2012, DBCT had an average weekly
throughput of 0.844mt.
  Coal stocks at July 8 were 0.564mt, a decrease of 0.117mt
w-o-w, and only about half the volume required for the most
efficient operation of the terminal.
  DBCT received on average 21 trains per day, a fall of two trains
per day w-o-w. DBCT normally receives 24-27 trains per day
when it is operating at its maximum potential.
  The DBCT ship queue decreased by four vessels w-o-w to
12 vessels as at July 9, with 10 vessels with coal available at
the mines, unchanged from last week. The optimal number of
vessels in DBCT’s ship queue is about 20 vessels.
  Shiploader 1 will be out of operation until July 19, shiploader
2 will be closed from July 11 to August 17 and shiploader 3 will
be out of action from July 16 to 18, all for planned maintenance,
according to ISS. A site-wide power outage is also planned on
July 18 for 14 hours.
GLADSTONE
The Port of Gladstone had a throughput of 1.405mt for the week
ending July 7, an increase of 0.128mt week-on-week.
  The RG Tanna and Barney Point coal terminals with a
3 combined nameplate capacity of 76mtpa operated 96% of
their nominal weekly capacity. In July 2012, the Gladstone coal
2.5
2
terminals had an average weekly throughput of 1.098mt.
  The volume of coal railed to the Port of Gladstone was

1.278mt, a decline of 0.204mt w-o-w. Coal stocks at the port also

1.8 1.5
1.6
1.4
1 declined, down 0.16mt w-o-w to 2.4mt. Gladstone requires coal
1.2
0.5 stocks of 2-3mt for the optimal performance of the terminals.
  As at July 10, the Gladstone ship queue had 21 vessels, an
1.0
0.8 0
increase of four vessels w-o-w, with nine of the vessels having
coal available at the port.
Source: HVCCC   A further 13 vessels are expected to arrive at Gladstone during
WEEKLY THROUGHPUT NEWCASTLE (Mt) the course of the week with one of the vessels currently having
coal available.
Test PORT KEMBLA
2.00
2.50 The Port Kembla Coal Terminal (PKCT) had a throughput
2.00 1.50
of 0.31mt for the week ending July 9. The 18mtpa terminal
1.50 1.00 operated at 90% of its nominal weekly capacity. In July 2012,
1.00
0.50
0.50 PKCT had an average weekly throughput of 0.234mt.
0.00 0.00   Coals stocks at PKCT were 0.34mt, down0.074mt week-on-
week, with a ship queue of two vessels, a decline of two vessels
w-o-w.
Source:PWCS t shipped closing stock port

Australian Coal Report Issue 0505 10 July 2013 6

 Coal Chain Australia
WEEKLY SHIPPING
LOAD PORT VESSEL DWT DISCHARGE PORT LOAD DATE Ld/Dis.Terms US$/t SHIPPER
Port Kembla Polaris TBN 140,000 Youngheung 21/30 Jul 45000C/30000C 12.94 Kepco
Newcastle Lansing TBN 70,000 Hualien/Hoping 18/24 Jul 25000C/24000C 11.65 Castleton
Richards Bay Cape Mercury 150,000 India 10/20 Jul Scale/40000C 14.10 not reported
Samarinda D'Amico TBN 70,000 Dahej 1/8 Jul 10000C/30000C 9.30 Libra
SE Kalimantan Navios Titan 65,000 Dahej 3/10 Jul 10000C/30000C 9.30 Libra
Mobile TBN 70,000 Hamburg 25 Jul - 10 Aug 25000C/30000C 15.00 Salzgitter
SOURCE: SSY

COAL SHIPS WAITING BY PORT (AUSTRALIA)

CoalPoint
Hay ships waiting by PortDalrymple
Gladstone (Australia)
Bay Newcastle
100

80

60
Vessels

40

20

14-May-13 21-May-13 28-May-13 4-Jun-13 11-Jun-13 18-Jun-13 25-Jun-13 2-Jul-13 9-Jul-13

Newcastle 22 26 20 21 12 21 21 14 21
Gladstone 12 16 20 18 12 16 21 17 21
Dalrymple Bay 19 26 28 23 21 21 16 18 13
Hay Point 9 5 5 5 3 2 4 2 3
SOURCE: ISS

Australian Coal Report is copyrighted © 2013 by Energy Publishing Pty Ltd. Information published is
considered accurate and reliable, but no responsibility or liability will be accepted for any error or omission.
www.coalportal.com
Distribution to nonsubscribers is a breach of copyright.
Tel +61-7-3020-4000 Fax: +61-7-3102-9151 | Editor: Marian Hookham Email: marian.hookham@ihs.com

Australian Coal Report Issue 0505 10 July 2013 7

 Coal Chain Australia
RS PLATOU COAL REPORT REPORT 10 JULY 2013
Vessel Route US$/tonne Vessel Route US$/tonne
Cape Gladstone/Qingdao 10.00 Post Panamax Gladstone/Qingdao 12.50
150,000Mt (10%) Newcastle/Qingdao 11.10 90,000Mt (10%) Newcastle/Qingdao 14.00
Vancouver/Qingdao 11.30 Vancouver/Qingdao 14.40
RBCT/Qingdao 14.40 Brisbane/Kaohsiung (Taiwan) 12.10
Gladstone/Krishnapatnam (India) 11.80 Gladstone/Krishnapatnam (India) 14.80
RBCT/Krishnapatnam 13.10
Mini Cape Brisbane/Kaohsiung (Taiwan) 13.10 Panamax Gladstone/Qingdao 12.80
110,000Mt (5%) Gladstone/Krishnapatnam (India) 15.20 70,000Mt (10%) Newcastle/Qingdao 14.00
Gladstone/Qingdao 13.20 Balikpapan/Qingdao 8.10
Newcastle/Qingdao 15.10 Lyttelton/Qingdao (62k) 17.80
Supramax Gladstone/Krishnapatnam (India) 20.80 Vancouver/Qingdao 14.60
50,000Mt (10%) Taboneo/Krishnapatnam 11.60 RBCT/Qingdao 16.60
Taboneo/Qingdao 11.60 Gladstone/Krishnapatnam (India) 15.50
Vancouver/Qingdao 20.60 RBCT/Krishnapatnam 14.20
Source: RS Platou (Australia) Pty. Ltd.
Contact details: drycargo.australia@platou.com

BALTIC DRY INDEX (BDI)

Chart Title

1200
1170

1150
1120

1100
Current week last week

SOURCE: DRYSHIPS.INC

FREIGHT
Downward momentum returned to the Capesize market last
week after a sudden revival towards the end of June. Average
vessel earnings began this month at a year-to-date high of
$15,218/day then fell back to $12,737/day by 5 July.
  This retreat was led by falls in the Atlantic, where round
voyage rates dropped by $3,730/day in only three trading days
to $12,530/day.
  However, on 8 July a rebound in the Atlantic market helped
to lift average earnings for Capesizes to $13,407/day. As a
consequence coal spot rates from Richards Bay to Qingdao fell
from the seven-month high of $13.85/t to $12.90/t, with the
rate from Newcastle to Qingdao also falling $0.95/t week-on-
week to $11.50/t.
  One of the main driving forces behind the recent rally in
Capesize rates has been the jump in iron ore cargo availability
from Brazil.
  Monthly export data from Brazil show increased shipments
in May and June which has been supplemented by robust
annual growth in Australian iron ore exports (for example June
throughput at Port Hedland was almost 30% to 27.7 Mt).
  With much of the strength in the Capesize market
attributable to improved iron ore cargo availability
(particularly in the Atlantic), this boost to rates has not been
shared by the wider dry bulk carrier sector.
  Average vessel earnings for Panamaxes slipped marginally
from the previous week to $7,966/day. Shipbrokers observed
more requires from the US Gulf and US East Coast.
  Elsewhere the spot Panamax voyage rate from Newcastle to
Qingdao route edged $0.10/t lower from last week to $12.25/t.
- Source: Simpson, Spence & Young

Australian Coal Report Issue 0505 10 July 2013 8

 Coal Chain Australia - monthly
MONTHLY THROUGHPUT (MT) NEWCASTLE
Throughput at the Port of Waratah Coal Services (PWCS)
Newcastle monthly shipments (Mt) operated Newcastle coal terminals in June 2013 was 9.314mt,
12
an increase of 0.871mt month-on-month. In June 2012, PWCS
had a throughput of 9.153mt.
10
  The Kooragang and Carrington terminals with a combined
8
nominal capacity of 133mtpa operated at 84% of their monthly
6
throughput capacity in June.
4   PWCS shiploading finished the month at an annualised rate
2 of 113.32mt and YTD annualised rate of 107.26mt. PWCS has a
0 shiploading target of 136.9mt for 2013.
  As at June 30, the PWCS ship queue had 13 vessels, a
decrease of four vessels from the end of May.
Shipments Port Capacity   Coal stocks at the end of June were 1.59mt, an increase
0.422mt m-o-m and above the 1-1.2mt minimum requirement
for the most efficient operation of the terminals.
Top 4 Export Destinations in June
  PWCS’s total coal exports to Japan decreased by 0.15mt
m-o-m to 4.36mt although thermal coal exports were up 0.1mt
Destination Total m-o-m % to 3.96mt but coking coal exports were down 0.25mt to 0.4mt
Variation in June.
Japan 4,356,174 -3.43%   Surprisingly exports to China increased by 1.27mt m-o-m to
China 2,608,933 94.01% 2.61mt, accounting for 28.22% of PWCS’s total exports for the
Taiwan 989,347 10.73% month. It was also the highest volume exported to China since
S. Korea 803,401 -30.07% the record breaking 2.95mt shipped in December 2012. The
June total included 2.43mt of thermal coal, up 1.09mt m-o-m,
SOURCE: PWCS and 0.18mt of coking coal.
  Coal exports to Korea from PWCS in June were down 0.35mt
m-o-m to 0.8mt of thermal coal. Taiwan shipments increased by
0.1mt to 0.99mt, including 0.89mt of thermal coal, up 0.34mt
m-o-m, and 0.1mt of coking coal, down 0.25mt.
  Meanwhile, NCIG shipped 2.489mt of coal through the Port
of Newcastle in June, down 0.655mt on the previous month.
NCIG with a nominal throughput of 53mtpa operated at about
60% of capacity.
  In June 2012, NCIG shipped 2.269mt of coal.

MONTHLY THROUGHPUT (MT)

GLADSTONE
Newcastle monthly shipments (Mt)
The Port of Gladstone exported 5.798mt of coal in June,
an increase of 0.449mt month-on-month and the best 6

performance since December 2011.

  The RG Tanna and Barney Point coal terminals with a 4

combined throughput capacity of 76mtpa operated at 92%

2
of the nominal monthly capacity. In June 2012, Gladstone
exported 5.122mt of coal.
0
  China just nudged out Japan as the largest recipient of
coal from Gladstone with 1.666mt, an increase of 0.376mt
m-o-m. Coal exports to Japan in June were 1.652mt, a fall of Shipments Port Capacity
0.228mt m-o-m.
  India was Gladstone’s third largest market with 1.162mt,
an increase of 0.172mt m-o-m. Top 4 Export Destinations in June
  Gladstone’s ship queue at the end of June had 19 vessels,
Destination Total m-o-m %
an increase of five vessels m-o-m.
Variation
China 1,666,279 65.11%
Japan 1,652,228 1.42%
India 1,162,492 67.98%
Korea 809,578 67.98%

SOURCE: GLADSTONE PORTS CORPORATION

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 Coal Chain Australia - monthly
MONTHLY THROUGHPUT (MT)
DALRYMPLE BAY
Newcastle monthly shipments (Mt) The Dalrymple Bay Coal Terminal (DBCT) had a
8 throughput of 5.65mt in June, an increase of 0.06mt
month-on-month and the best performance so far in
6
2013.
4   The 85mtpa capacity terminal operated at 80% of
its nominal throughput capacity. In June 2012, DBCT
2 exported 4.252mt of coal.
  Coal stocks at the end of June were 0.534mt, down
0
0.07mt at the end of May and only about half the volume
required for the most efficient operation of the terminal.
DBCT received an average 19 trains per day in June, about
Shipments Port Capacity
the same number of trains per day as in May.
  The DBCT ship queue had 18 vessels at the end of June,
SOURCE: DBCT a decrease of nine vessels m-o-m.
  The vessels had an average turn time of 14.52 days
PORT KEMBLA during the month compared with YTD average turn time
of 14.55 days.
Port Kembla Coal Terminal (PKCT) exported 1.072mt of coal   In June, 47 vessels arrived to load 5.048mt of coal. At
in June, a fall of 0.04mt month-on-month. Exports included the beginning of this month, DBCT expected 34 vessels to
0.677mt of coking coal and 395mt of thermal coal. In the arrive in July to load 3.263mt of coal.
latter part of the month, Port Kembla was closed for several
days due to heavy swells and shiploading was restricted
because of an electrical problem with a shiploader.
  The 18mtpa capacity terminal operated at 71% of its
nominal monthly capacity. In June 2012, PKCT exported
1.493mt of coal.
  China was the largest importer of coal from Port Kembla
with 0.441mt of coking coal followed by India which
imported 0.223mt of coal including 0.132mt of coking coal
and 0.091mt of thermal coal.
HAY POINT
  PKCT exported 0.111mt of coal to Japan in June.
The BHP Mitsubishi Alliance (BMA) operated Hay Point
Coal Terminal (HPCT) exported 4.137mt of coal in June,
a monthly export volume that hasn’t been bettered
MONTHLY THROUGHPUT (MT) since September 2007. Throughput was up 1.061mt on
Newcastle monthly shipments (Mt) the May volume.
2.00   The 44mtpa capacity terminal operated at 113% of its
nominal monthly capacity. In June 2012, HPCT exported
1.50 2.68mt of coal. Shiploader 2 is expected to be out of
operation until August 12 for planned maintenance.
1.00

0.50

0.00
MONTHLY THROUGHPUT (MT)
Newcastle monthly shipments (Mt)
Shipments Port Capacity

Top 4 Export Destinations in June 3

2
Destination Total m-o-m %
Variation 1
China 440,780 143.71% 0
India 222,845 -29.39%
Japan 123,492 -59.99%
Taiwan 86,413 n/a Shipments Port Capacity

SOURCE: PORT OF HAY POINT

SOURCE: PORT KEMBLA COAL TERMINAL

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 Coal Chain Australia - monthly

ABBOT POINT BRISBANE

The Adani owned Abbot Point Coal Terminal (APCT) had
a throughput of 1.677mt in June, a decrease of 0.241mt
month-on-month.
  The 50mtpa capacity terminal operated at 40% of its
nominal monthly capacity. In June 2012, APCT exported
0.917mt of coal.
  At the end of June, APCT had six vessels in its ship queue,
an increase of four vessels m-o-m, according to ISS.
The New Hope Corporation-owned Queensland Bulk
Handling (QBH) coal facility at the Port of Brisbane
exported 0.94mt of coal in June, an increase of 0.343mt
month-on-month.
  The 10mtpa capacity terminal operated at 113% of
its nominal monthly throughput capacity. In June 2012,
QBH exported 0.679mt of coal.

MONTHLY THROUGHPUT (MT) MONTHLY THROUGHPUT (MT)

Newcastle monthly shipments (Mt) Newcastle monthly shipments (Mt)

2.50 1.00

2.00

1.50
0.50
1.00

0.50

0.00 0.00

Shipments Port Capacity Shipments Port Capacity

SOURCE: ABBOT POINT TERMINAL SOURCE: PORT OF BRISBANE

MONTHLY ANNUALISED RATES (MT)

Nominal
Ports Capacity Jun-13 M-O-M % Y-O-Y % YTD total Annualised
(Mtpa)
QUEENSLAND
Dalrymple Bay 85 5,649,690 1 33 31,011,837 68,737,895
Gladstone 76 5,797,810 8 13 27,731,842 70,540,022
Hay Point 44 4,137,475 35 54 18,368,051 50,339,279
Abbot Point 50 1,676,749 -11 83 9,868,246 20,400,446
Brisbane 10 939,945 57 38 4,144,550 11,435,998
NEW SOUTH WALES
PWCS 133 9,314,000 10 2 53,191,969 113,320,333
NCIG 30 2,489,932 -21 10 16,392,793 30,294,173
Port Kembla 18 1,092,652 -2 -28 6,155,814 13,293,933
total 31,098,253 7 17 166,865,102 378,362,078
SOURCE: PORTS OF QUEENSLAND AND NEW SOUTH WALES

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