Coal price surge sets min­ers against ac­tivists

Kuwait Times - - BUSINESS -

In north­east­ern Eng­land, a bat­tle is rag­ing be­tween grass roots cam­paign­ers and a com­pany in­tent on dig­ging a new open cast mine as world coal prices soar. A year af­ter Bri­tain closed its last deep coal mine and pledged to phase out coal-fired power gen­er­a­tion, the eco­nom­ics of min­ing have been trans­formed.

Coal prices have risen by well over 100 per­cent this year to $100 a ton. Some min­ing stocks have risen even more, spurred by US Pres­i­dent-elect Don­ald Trump’s pledges to re­vive coal and pull out of the Paris Agree­ment on cli­mate change.

Some won­der how long the coal price surge will last, but in Northum­ber­land, the Banks Group is press­ing ahead with plans for a new mine de­spite op­po­si­tion from lo­cal en­vi­ron­men­tal­ists. Northum­ber­land County Coun­cil agreed that Banks could ex­tract 3 mil­lion tons of coal by cut­ting an open cast mine near Druridge Bay, a scenic windswept arc of white sand and grassy dunes on the North Sea coast.

The govern­ment has “called in” the ap­pli­ca­tion, mean­ing there will be a pub­lic en­quiry next year. Jean­nie Kielty, who works on com­mu­nity re­la­tions for Banks, says open cast is part of the so­cial fab­ric of the north­east, an area with a long his­tory of coal min­ing.

“The ben­e­fits that come from these sites can’t be over-stated,” she says. “We are frus­trated with the call-in be­cause it de­lays us, but we still be­lieve we can work the site.” On the other side of the ar­gu­ment is the Save Druridge Bay cam­paign, which meets in the Drift Cafe, a haven for dog­walk­ers and bird-watch­ers not far from Highthorn, the site of the pro­posed mine.

There is a hard core of eight cam­paign­ers, led by the cafe owner Duncan Lawrence. It also has high-pro­file sup­port from tele­vi­sion per­son­al­ity and co­me­dian Bill Od­die, a keen bird watcher who ap­pre­ci­ates the pink-footed geese that win­ter among the dunes.

“Sud­denly some­one wants to turn the clock back in some re­ally per­verse way,” Od­die said at a cam­paign­ing beach party in May. “It’s sac­ri­lege.”

COALS TO NEW­CAS­TLE

Banks has over­come op­po­si­tion in the past, ap­peal­ing suc­cess­fully against a ban on de­vel­op­ing an­other site in the area at Shotton. Si­t­u­ated on the Blag­don Es­tate owned by Matt Ri­d­ley, a peer and Con­ser­va­tive politi­cian who has said cli­mate change has done more good than harm, Shotton has been mined by Banks since 2008.

Banks says all the coal at Shotton and Highthorn can be ex­tracted by the govern­ment’s 2025 dead­line for phas­ing out coal­fired power gen­er­a­tion.

But the com­pany plans to ex­pand. In Septem­ber, Banks an­nounced it was ex­port­ing coal to Spain and it has be­gun can­vass­ing opin­ion on a pro­ject to ex­tract 800,000 tonnes of coal at Dew­ley Hill near New­cas­tle. Bri­tish plan­ning rules and the govern­ment’s drive to close coal-fired power sta­tions do al­low coal min­ing in some cir­cum­stances.

The phase-out plans ap­ply only to so­called un­abated coal, mean­ing a com­pany that has the tech­nol­ogy to re­duce emis­sions can carry on gen­er­at­ing power with coal. Ex­cep­tions can also be made if there is a risk that sup­plies will be dis­rupted, a dan­ger height­ened by Bri­tain’s vote to leave the Euro­pean Union. That makes the coun­try more re­liant on its own re­sources and less sure it can tap into the Euro­pean power grid.

Big banks say they have stopped fund­ing coal in Bri­tain, although they may con­sider projects in some emerg­ing economies. For share­hold­ers, it made fi­nan­cial sense to get out of the in­dus­try a year ago, when min­ing stocks and coal prices were col­laps­ing. Now the min­ing sec­tor of­fers at­trac­tive yields at a time when in­ter­est rates are at record lows.

Shares in Glen­core, the world’s big­gest ship­per of seaborne coal, have risen more than 200 per­cent since Jan­uary. Fos­sil Free, which cam­paigns against fos­sil fu­els, says the shift to­wards a low car­bon econ­omy is ir­re­versible. But while 580 in­ter­na­tional in­vest­ment in­sti­tu­tions pledged to aban­don coal in 2015, the group does not know how many have kept their prom­ise.

‘FINELY BAL­ANCED’ DE­CI­SION

Northum­ber­land County Coun­cil plan­ning of­fi­cer Frances Wilkin­son, who pre­pared the re­port rec­om­mend­ing ap­proval for Highthorn, faced a dif­fer­ent ques­tion. She found the de­ci­sion very dif­fi­cult as the en­vi­ron­men­tal im­pact and the ben­e­fits were “finely bal­anced”. She was guided, she said, by a clause in plan­ning reg­u­la­tions that per­mis­sion should not be given for coal min­ing un­less the pro­posal is en­vi­ron­men­tally ac­cept­able or can be made so, or “it pro­vides na­tional, lo­cal or com­mu­nity ben­e­fits which clearly out­weigh the likely im­pacts”.

Banks says Highthorn will em­ploy 100 peo­ple and gen­er­ate 48 mil­lion pounds ($60 mil­lion) in re­lated con­tracts and other ben­e­fits to the com­mu­nity. Last year Banks made an op­er­at­ing profit of 18 mil­lion pounds ($22 mil­lion), down from 27 mil­lion pounds the pre­vi­ous year be­cause of a fall in the coal prices. It says its break-even coal price is a com­mer­cial se­cret but it can make a profit even when prices are low. The group also in­cludes a re­new­ables arm and a prop­erty divi­sion. For the Save Druridge Bay cam­paign­ers, the jobs and the prof­its do not com­pen­sate for what is un­der threat. Asked what is so spe­cial about Druridge Bay, cafe owner Lawrence says it’s the si­lence.

“It’s an area of tran­quil­lity undis­turbed by noise,” he says. — Reuters

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.