Cratering demand signals more trouble in coal country www.mining.com

The shift from coal to cheaper and cleaner fuel sources like natural gas and renewables claimed another victim in the US last week.

Peabody Energy said it will close its Wildcat Hills coal mine and nearby Willow Lake processing facility in southern Illinois before year-end due to “uneconomic mining conditions.”

The announcement — which affects 225 workers — followed news in September that Peabody ended cash tender offers to buy back debt, due to poor market conditions. In June, the pure-play coal company signed a deal with Arch Coal to combine the companies’ assets in the Powder River basin and Colorado into a joint venture to save costs and strengthen their competitiveness against natural gas and renewables.

More cutbacks and layoffs are likely, particularly in the Powder River basin of Wyoming and Montana. “We expect that at least a few Powder River basin mines will close in the early 2020s,” Moody’s Investor Services commented in an Oct. 16 research note.

Peabody’s troubles certainly didn’t begin this year. The company filed for bankruptcy in 2016, and billions of dollars in debt were scrubbed from its balance sheet before it came out of court protection in 2017. Three other big U.S. coal producers also filed for bankruptcy between 2015 and 2016 — Alpha Natural Resources, Arch Coal and Patriot Coal.

The wave of Chapter 11 filings seems to be picking up as coal consumption falls, and coal-fired power plants go offline.

Five coal companies have filed for bankruptcy already this year (Blackhawk Mining, Blackjewel, Cambrian Holding Co., Cloud Peak Energy and New Trinity Coal), while Mission Coal and Westmoreland Coal went bust in October 2018.

In August, Moody’s forecast profitability in the coal sector will worsen over the next 12 to 18 months. “A confluence of economic, environmental and social factors also increase our concerns about the industry’s longer-term demand prospects, as pressure on the industry is mounting, which makes numerous coal mines uneconomic in a reduced demand environment, especially smaller, higher-cost mines that are highly vulnerable to retirement of specific coal-fired power plants.”

The U.S. Energy Information Administration (EIA) notes that coal’s share of electricity generation in the U.S. was just 28% last year, down from 48% in 2008, and forecasts it will average 25% this year and 22% in 2020.

The “closures of coal-fired power plants already announced, plus other likely closures such as power plants more than 50 years old, would reduce coal to as little as 11% of total U.S. power generation by 2030,” Moody’s predicted in July. “This drop would represent a substantial reduction from today’s mid-20% contribution to power generation, and the continuation of an ongoing secular decline in thermal coal demand.”

Power companies in the U.S. retired more than 546 coal-fired power units between 2010 and the first quarter of 2019, or 102 gigawatts (GW) of generating capacity, and another 17 GW of coal-fired capacity is expected to be retired by 2025, EIA states. Last year plant owners retired more than 13 GW of coal-fired generation capacity — “the second-highest annual total for U.S. coal retirements in EIA’s data set.” The largest number — 15 GW — was retired in 2015.

U.S. coal consumption has fallen nearly 42% since its peak in 2005, and in 2018 fell to 687 million tons (623 million tonnes) — the fifth straight annual decline, and the lowest level since the 1970s, the EIA says.

Increased competition from natural gas (now the second-largest energy source consumed in the U.S.) and renewables (whose consumption has nearly tripled since 1950) is putting the squeeze on coal.

In April, U.S. electricity generation from renewable sources (23%) exceeded coal (20%) for the first time, according to EIA’s stats. The agency defines renewables as hydropower, wind, solar and geothermal.

While cost competitiveness has played a role in the move away from coal, so too have green-energy mandates and stronger environmental regulations, and a mounting aversion in the financial and debt markets to invest in the commodity.

At least 19 major insurers — mainly in Europe — have divested from coal, and the combined assets covered by divestment policies rose from $4 trillion in 2017 to more than $6 trillion in 2018, or from 13% to 20% of the insurance industry’s global assets, according to a report in December 2018 by the Unfriend Coal network. The group — a global coalition of non-governmental organizations including Greenpeace, Sierra Club and the Rainforest Action Group — is pressuring insurance companies to get out of the coal business.

In July, Chubb became the first major insurance company in the U.S. to stop underwriting the construction and operation of new coal-fired power plants, and said it wouldn’t sell new policies to corporations where more than 30% of revenues come from mining thermal coal.

It won’t be the last.

(This article first appeared in The Northern Miner)

Private entities raise concern over business environment www.zgm.mn

Mongolian economic forum 2019 under the theme National In­terest kicked off on october 30, at the Mongolian National Chamber of Commerce and Industry (MNCCI). The annual forum aimed to build consensus for defining sustainable economic development policies and addressing challenges key sectors of Mongolia are facing, among poli­cymakers, the business community, academia, and civil society. This is the first economic forum held during the time that the 2020 State Budget is being discussed. President of MNCCI, Amartu­vshin otgondavaa said in his open­ing speech “This year, the Mon­golian economic forum is being organized by private sectors under the theme of National Interest. Al­though the economy is growing, poverty remains high and many social issues have not been resolved.”The forum was co­organized by non­governmental organizations working to protects businesses and their interests, namely, MNC­CI, Mongolian economic forum (Mef) Ngo, Mongolian Business Council, Ceo Club, without any government involvement. “Business owners gathered here to discuss what they are facing and to make recommendations to government and policymakers. There­fore, panelists of today’s forum do not have high positions, but just business owners who express their concerns on behalf of civil society,” highlighted one of the panelists According to the National Sta­tistical office, only about 50 per­cent of the total registered 180,000 enterprises are currently operating.

Mongolia arrests 800 Chinese citizens in cybercrime probe www.reuters.com

ULAANBAATAR (Reuters) - Police in the Mongolian capital of Ulaanbaatar have apprehended 800 Chinese citizens and confiscated hundreds of computers and mobile phone SIM cards as part of an investigation into a cybercrime ring, local security authorities said.

Mongolia approves national program to improve living quality of seniors www.xinhuanet.com

The Mongolian government has approved a national program to promote the development and protection of seniors, the government's press office said Thursday.

Mongolia’s flag on the high seas www.news.mn

Mongolia is land-locked country, nevertheless, it has its own maritime law. Under the international rights of landlocked countries to fly their own flag on the high seas, Mongolia has been operating an open ship registry in Singapore since 2003.

Partnership of MIAT and Korean Air brought to new level www.montsame.mn

Ulaanbaatar /MONTSAME/. MIAT Mongolian Airlines and Korean Air, flag carriers of Mongolia and South Korea established a memorandum of understanding with the purpose of air transport development, flight network expansion and promotion of competitiveness within the framework of the air communications agreement between the Government of Mongolia and the Republic of Korea signed last January. Executive Director of MIAT D.Battur and Co-Rep Director and Vice President of the Korean Air Lines Co Ltd Kee-Hong Woo signed the document.

Ministers meet representatives of Asian Infrastructure Investment Bank www.montsame.mn

Ulaanbaatar /MONTSAME/ Minister of Construction and Urban Development Kh.Badelkhan on October 28 met with a delegation led by Konstantin Limitovskiy, Senior Advisor to the President and Chief Programming Officer at Asian Infrastructure Investment Bank (AIIB).

Shanghai helps fuel Tesla's electric car dreams www.chinadaily.com.cn

Tao Lin, vice-president of Tesla Inc, was right when she said the US electric carmaker had made the right choice in 2018 by choosing to build its first overseas plant in Shanghai.

"Thanks to the outstanding business environment in Shanghai, many of our innovative ideas have become realities. From what we have achieved, it is a correct choice," Tao told reporters on Tuesday in Shanghai.

Tesla's Shanghai story is more than just innovative. The plant broke ground in January 2019 and started trial production in October, without CEO Elon Musk pitching a sleeping bag in the factory to supervise the progress, as he frequently did in the US.

To cap it, the $2 billion plant was around 65 percent less expensive to build than its Model 3 production system in the US, said Tesla in its third-quarter financial statement.

Tao said the plant will soon start production of its Model 3 sedans after it goes through final approval procedures. "They will be world-class," she said. The initial capacity will be 3,000 cars a week and deliveries would start in the first quarter of 2020.

Bookings for the model, with a mileage of 460 km, started from Friday at a list price of 355,800 yuan ($50,398). Tesla is also offering two other versions of Model 3 sedans that are imported from the United States.

"China is by far the largest market for mid-sized premium sedans. With Model 3 priced on par with gasoline powered mid-sized sedans, we believe China could become the biggest market for Model 3," Tesla said in its quarterly financial statement.

The prospects are not limited to the Model 3 alone. Despite a 25 percent import duty, the country is already the company's second-largest market, just behind the US and ahead of Norway and the Netherlands.

Tesla's third-quarter financial statement shows that its sales revenue in China surged 64 percent to $669 million in the quarter, while the figure in the United States fell 39 percent to $3.13 billion.

Bloomberg estimated that the US demand will probably cool as federal tax credits for Tesla cars expire, but China's market for electric cars has remained strong since it overtook the United States as the world's largest new energy vehicle market in 2015.

Statistics from the China Association of Automobile Manufacturers show that their sales totaled 872,000 units in the first three quarters of this year, up 20.8 percent year-on-year, despite the overall car market declining for 15 months in a row.

Yale Zhang, managing director of Shanghai-based consulting firm Automotive Foresight, said the arrival of localized Tesla models is of great significance.

The plant sends a clear signal of the country's intent to further open up its automotive industry to the world and will be the country's first fully foreign-owned car manufacturing facility.

China decided to allow establishment of such units in 2018 in the new energy vehicle sector and plans to allow the same in commercial vehicles and passenger cars by 2020 and 2022.

"China said it and has kept its word," said Zhang.

He said Tesla will also help improve the competitiveness of local new energy vehicle makers by forcing those incompetent ones out of business, some of which have been over-reliant on the government's financial stimuli, and inspire serious and ambitious companies to do a better job.

Ma Fanglie, president of BJEV, China's most popular electric car brand, said Chinese companies have something to learn from Tesla.

"It is not eligible for subsidies in China but its sales have been impressive. That's because its products offer great experiences that draw wows from its customers. We should develop such products as well," he said at an industry forum earlier this month.

116 thousand households in Ulaanbaatar to enjoy nighttime electricity tariff discount www.montsame.mn

Ulaanbaatar /MONTSAME/. As an effort to reduce urban outdoor air pollution, discount for nighttime electricity tariff for Ger dwelling areas is applied from every November 1 to April 1.

Special Operation: some 1000 Chinese citizens held www.news.mn

29 October night, in a special combined operation, the Mongolian authorities detained around 1000 Chinese citizens in four hotels in Ulaanbaatar. According to our sources, the National Police Agency, the General Intelligence Agency and Mongolian Immigration conducted a joint special operation. The Chinese citizens, who are now in custody, are suspected of financial swindle at the ‘Amar’ and ‘Oriental’ Hotels in the Bayanzurkh District of the capital, as well as the ‘Kentavr’ Hotel in the Bayangol District and the ‘Union’ Hotel in Sukhbaatar District.