The South China Morning Post just published this following article, which is absolutely huge for Morien Resources (TSXV: MOX) as Donkin is one of the only new sources of coal that can be exported to China to help them solve their crisis. At this point there is a 99.9% chance that Donkin will be rushed to restart operations in the upcoming months and we will likely receive public confirmation in early October. Donkin's coal will mostly be exported as coking coal but it is a rare type of coal that can also be used as thermal. Coking coal prices in China are also soaring today and are very close to hitting a new record high! Billionaire Chris Cline was willing to pay a 58% premium for MOX shares in 2014 and accumulated additional shares to become MOX's largest shareholder, because he knew how extremely valuable MOX's royalty would become! China's crisis is about to get much worse with winter approaching!
China power crisis: thermal coal inventory nears record low as country suffers worst outages in a decade
State media now says 20 out of 31 provincial jurisdictions have implemented electricity-rationing measures since mid-September
Total coal inventory at China’s major power-generation groups is just 11.31 million tonnes – enough to meet demand for only about two weeks
In past years, when the calendar turned to September, China’s power-generation groups set out to replenish their coal inventories ahead of the cold winter months.
This year, coal is so scarce that they are struggling to merely keep the lights on. And some are failing even at that.
As of September 21, the total stockpile of thermal coal – used to generate electricity – held by the nation’s six major power-generation groups stood at just 11.31 million tonnes – which is capable of meeting demand for a near-record low period of just 15 days, according to Sinolink Securities.
The inventory of coal-fired power plants in most parts of the country should, in principle, be no less than 20 days’ worth of coal consumption during the off-season, including now, according to China’s top economic planner.
Sinolink Securities also estimates that, from September to February, China will need 1.85 billion tonnes of thermal coal, but projections indicate it will fall short by 222 million to 344 million tonnes – or about 12 to 19 per cent less than is needed.
The analysis comes as the world’s second-largest economy is suffering its worst power blackouts in a decade. State media reported on Tuesday that at least 20 out of 31 provincial jurisdictions – from industrial powerhouses in the south such as Guangdong to the rust belt in the northeast – have rolled out electricity-rationing measures in recent weeks, triggering widespread alarm among much of the population and plunging the nation’s industrial sector into chaos.
Illustrating the severity of the situation, traffic lights were abruptly turned off in the northeastern city of Shenyang last week as part of power-rationing measures that local authorities deemed necessary “to avoid the collapse of the entire grid”.
Last month, the US National Oceanic and Atmospheric Administration said there was a 70 per cent chance that La Niña weather conditions would return in the upcoming months, indicating that China may experience a relatively colder winter.
The gap between the coal inventory of the country’s major power groups and the daily coal consumption began to widen in April. And since January, the price of thermal coal has soared from about 670 yuan (US$104) per tonne to around 1,100 yuan (US$170) recently amid strong demand and limited supply.
The price surge has made the power-generation companies unwilling to generate enough power to meet demand, as the revenue is not enough to cover costs, according to the securities firm.
From January to August, China’s power production rose by 11.3 per, year on year, but its coal production increased only 4.4 per cent in the same period, official data shows.
China consumes more than 3 billion tonnes of thermal coal annually, but only about 7 per cent of that is imported. Before Beijing unofficially banned all Australian coal in October, almost 2 per cent of China’s total consumed thermal coal came from Australia due to its reasonable price and high quality. This equated to about 50 million tonnes a year, according to official Australian figures. However, since the ban, China has stepped up purchases of coal from countries such as Mongolia and Indonesia to meet the surging domestic demand.
The main type of thermal coal that China used to buy from Australia had an energy value of 5,500 kcal/kg. But analysts note that coal from alternative sources may be of lesser quality, and potentially less efficient for energy production, further straining the power supply.
“Since the Australian coal ban, there has been a shortage of 35 million tonnes of high-quality coal. Currently, 70 per cent of [China’s] imported coal is from Indonesia, with an energy value of 3,800 kcal/kg, and it is difficult to import enough thermal coal with high calorific value and low sulphur,” said a note by Nanhua Futures on Tuesday.
On Monday, Jilin Governor Han Jun said the northeastern province – which experiences very cold winters – would try to accelerate thermal coal imports from Russia, Indonesia and Mongolia.
In early 2016, China began cutting its coal-production capacity, and this has resulted in a significant gap between supply and demand.
Meanwhile, the number of available mines has also decreased as a result of over-mining. Together, these factors have contributed to the current coal crisis, analysts say.
“In the past few years, all of the easy-to-mine and high-quality coal has been mined out. For example, the coal in Shanxi used to be in shallow layers and easy to mine, and of good quality, but now the resources are quite scarce as the coal is in deeper layers, which is more difficult to mine, and the quality is not that good,” said Yunhe Hou, an associate professor at the Department of Electrical and Electronic Engineering at the University of Hong Kong.
Coal production in Inner Mongolia, home to a third of China’s coal output, has also been disrupted. Corruption probes launched last year into the development of mines over the past two decades have hurt output in the autonomous region, which has 523 mines with a combined estimated capacity of 1.3 billion tonnes a year.
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