Coal Demand Shifting to Asia with Big Implications for Markets
As Europe and America consume less coal, China gains greater influence over coal industry
In its medium-term coal market report for 2016, IEA reports that global coal demand growth has stalled after more than a decade of 4% annual growth, with demand in 2016 to be below 2013 levels. Consumption decreased for the first time in 2015 as declines in the U.S. and China were not offset by growth elsewhere.
China saw coal use decline in all major consuming sectors; electricity, steel, and cement. Coal generation dropped due to sluggish 0.5% electricity demand growth and the country’s diversification policy, which led to growth in hydro, nuclear, wind, solar, and natural gas power generation growth.
Coal use in the U.S. plummeted due to low natural gas prices and coal plant retirements pushed by the Mercury Air Toxics Standards (MATS). Overall U.S. coal consumption dropped 15%, the largest annual decline ever.
Plenty of coal in Asia’s stocking
Even as coal declines in Europe and America, the shift to the East is accelerating. Coal is the preferred option to increase power generation in growing economics that face electricity shortages. Solid consumption and growth is expected for India, Vietnam, and Indonesia, although China will continue to be the largest coal consumer by far over the period.
Coal production and trade has been traditionally believed to be less affected by geopolitical issues due to easy logistics and widely distributed reserves. As coal consumption shifts to Asia, however, IEA has raised the possibility that coal production, demand, trade, technology, and finance might disappear from Europe and America and become increasingly concentrated in Asia.
IEA believes this might make coal consumption more controversial, complicating negotiations on mitigation of C02 emissions.
Despite increasing restrictions from many European and North American banks and institutions on coal financing, the agency reports investments in coal power generation have been stable over the past few years.
China will move the coal world with 50% of global demand, 45% of production and 10% of seaborne trade
Although IEA sees a brief dip in Chinese electricity and coal demand over the next few years, the country will account for 50% of global coal demand, 45% of coal production, and 10% of seaborne trade over the next decade.
Measures taken by the government this year to curb oversupply caused coal prices to spike. Reacting quickly, the Chinese government softened the policy shortly after implementing it to ease volatility. Rapid production cuts and price increases produced a spike in imports to China.
In short, Chinese macroeconomic development and policies have a huge influence on coal supply and demand worldwide.
Mining capex is currently very low, very few projects are moving ahead, overcapacity remains in China, and current strong prices are more linked to Chinese policies to cut oversupply rather than sustained strong demand.
CBI willing to further probe coal case against Santosh Bagrodia, Vijay Darda
The CBI on Thursday said it would carry out further probe in a coal block allocation scam case in which ex-Minister of State for Coal Santosh Bagrodia, former Rajya Sabha MP Vijay Darda and others are facing allegations of cheating and criminal conspiracy. The submissions by the agency before a special court came on an application filed by one of the accused who had sought further investigation in the case claiming that CBI had conducted “incomplete probe on various vital points”.
Taking note of the CBI’s contention, special Judge Bharat Parashar posted the matter for consideration on Friday.
The court had earlier granted bail to Bagrodia, Vijay Darda, his son Devendra Darda, ex-Coal Secretary H C Gupta, retired public servant L S Janoti and Director of AMR Iron and Steel Pvt Ltd, Manoj Kumar Jayaswal, in the case which is currently at the stage of arguments on framing of charges. Besides them, the firm is also accused in the case.
The application moved by advocate Vijay Aggarwal on behalf of the accused firm on October 3 had sought the court’s direction to the Investigating Officer (IO) for further probe in the matter.
Senior public prosecutor A P Singh, appearing for CBI, said though he did not agree with the grounds on which further investigation was sought by firm, “but keeping in view the overall facts and circumstances, CBI may be permitted to carry out further investigation.”
Singh said that investigation was the sole prerogative of the probe agency, but “in the interest of justice, CBI may be permitted to carry out further probe.”
In the application, Aggarwal claimed that “there has been incomplete investigation on various vital points by the IO and the probe agency has submitted an incomplete charge sheet before the court without making proper and complete probe”.
“Various allegations levelled by CBI are premised primarily on allegations which are based on incomplete and inchoate information, which are made by concealing relevant facts and hence it is imperative that further investigation be directed in the present matter,” the plea said.
The case pertains to alleged irregularities in allocation of Bander coal block in Maharashtra to accused firm AMR Iron and Steel Pvt Ltd.
The court had summoned the accused after taking cognisance of the alleged offences punishable under sections 120-B (criminal conspiracy) read with 420 (cheating), 409 (criminal breach of trust by public servant) under IPC and Prevention of Corruption Act.
In its January 30, 2015 order, the court had observed that Bagrodia, Gupta and Janoti had allegedly committed criminal misconduct and facilitated AMR Iron and Steel Pvt Ltd in unlawfully obtaining the coal block.
The charge sheet was filed against the accused for alleged offences punishable under IPC and Prevention of Corruption Act.
Regarding AMR Iron and Steel Pvt Ltd, CBI had claimed in its FIR that the firm, in its application form for allocation of coal block, had “fraudulently” concealed the fact that its group firms had previously been allocated five coal blocks.
http://indianexpress.com/article/india/cbi-willing-to-further-probe-coal-case-against-santosh-bagrodia-vijay-darda-4440527/
Warm Regards
Anurag Singal
Sr Manager –Business Development
Essel Mining & Industries Ltd
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