Baosteel and Wuhan Iron and Steel merger talks have global industry hoping for Chinese steelmaking consolidation

The long-awaited consolidation of the Chinese steel industry has begun, with Baosteel Group (the world’s 6th largest steelmaker) and Wuhan Iron and Steel (the world’s 12th largest) initiating talks on a merger which would make them the world’s 2nd largest maker of steel, behind only ArcelorMittal. The global industry is hoping that the merger, if it goes ahead, will result in a reduction in steelmaking capacity, going some way to cure the current global overcapacity, but at present it is unclear if that will happen. Nevertheless, the Chinese government has announced its intention to reduce overcapacity in a number of sectors (coal and cement included), and such a merger would be in line with such intentions. According to the Financial Times, the Chinese government, which owns the two companies directly (some Chinese steelmakers are owned by local governments), in fact began preparations to merge them two years ago, moving top staff between the two, and removing other staff. What is certain is that the global industry will watch with interest, not just this merger, but the entire Chinese steelmaking sector.

Tanzania’s president sets target of adding 8,500 MW of power generation capacity in next nine years

Tanzania’s president John Magufuli has made increasing the country’s power generation capacity a top priority, according to a report by the Financial Times. Mr Magufuli, a trained industrial chemist elected president last year, has a reputation for getting things done, having earned the nickname the “Bulldozer” while minister for public works in previous governments. A new goal of increasing the nation’s total generation capacity from the current 1,500 MW to 10,000 MW by 2025 has been set, with two gas-fired plants planned already. They are to be built near the capital Dar es-Salam on the central-northern coast, fuelled by gas from the south, transported via a recently completed Chinese-built gas pipeline. The country has large proven offshore gas reserves (around 55 trillion cubic feet), but must find a way to efficiently exploit them in order to supply the country with a reliable energy source, and possibly to become a gas exporter. Foreign gas companies are seen as vital to this process, but falling gas prices and complications with previous Tanzanian governments have cooled these companies’ interest, creating a hurdle for Mr Magufuli’s government to overcome. One piece of good news has come, however, with Tanzania securing the route of an oil pipeline to be built from Uganda. The pipeline, expected to be financed by Total, was to run from Uganda to a port in Kenya, but will instead bypass Kenya and go to a port in Tanzania. Much more good news will be required for the new government to increase the number of Tanzanians enjoying access to electricity from the present ~20%.

South Korea to curb greenhouse and fine particulate emissions by closing some and upgrading remainder of coal-fired power plants

The South Korean government has announced it plans to close 10 coal-fired power plants and upgrade each of the other 43 in the country by 2025, with the dual aims of reducing carbon dioxide and fine particulate emissions. At the Paris Climate Conference last year, South Korea pledged to reduce carbon emissions by 37% by 2030 (against business-as-usual projections), and the closures are expected to contribute around 6% of that amount, while the closures and upgrades together will lower fine particulate emissions by 24%. Twenty planned coal-fired plants, to be built by 2022, are still to go ahead, meaning that the country will finish 2025 with 63 coal-fired plants, although no new coal-fired plants will be added to future planning. Therefore, due to expanding electricity demand, the share of coal in the energy mix is expected to fall slightly, from the current ~28% to about 26.2% in 2029, with renewables (including biomass firing) expanding. Gas currently makes up 25% of the electricity mix, and nuclear 30%.

French government advised to raise taxes on, or make stricter carbon emission standards for, coal-fired plants

A committee advising the French government has given recommendations for policy to encourage the country to shift to natural gas firing from coal. The two principal policy options are increasing taxation on coal-fired plants and setting stricter carbon emissions standards. Also recommended was the initiative previously mooted by the French government of setting a European carbon price corridor, with minimum and maximum prices having an upwards trajectory with time, in order to raise the price to a compelling level. The committee was headed by the chairman and former CEO of Engie, Gerard Mestrallet.

US substation vulnerability still a risk to ‘keeping the lights on’

Back in 2013, the Combustion Industry News covered The Wall Street Journal’s investigations into the security of substations in the US transmission grid, after an attack on a substation in California which knocked out 17 transformers helping to power Silicon Valley. After regulations were introduced in 2014 by the Federal Energy Regulatory Commission requiring substations which if rendered inoperable could result in widespread instability (an estimated 350 out of 55,000 substations across the country) to have certain minimum security features, and in light of recent additional security breaches at substations, The WSJ this month re-examined the issue. Dozens of break-ins were investigated by the paper, with the wider number of total attacks being unknown, no government agency keeping reliable statistics. While security may have increased at some facilities, many substations still lack electronic security, such that any attack is not noticed until after the incident, and at times alarms are simply ignored by intruders. A security consultant who inspected 1000 substations over 14 states reported that half had only a padlock on the gate protecting them, no cameras or alarms. Resources are thin on the ground – at PG&E, the utility that owns the California substation attacked in 2013, there were 26 staff to protect 900 substations in 2014 (when the same substation was again attacked). Although the motive for attacks seems so far simply to be theft, the chief worry for overall grid security is now a coordinated attack on several smaller sites at once, which on their own may not be vital, but together are. With the Foundation for Resilient Societies describing the grid as “a battleground of the future,” it seems that substation security may rise to be a bigger issue in years to come.

Valmet to supply biomass boiler to Russia’s Segezha

Finland’s Valmet has secured a contract to supply a 90 MW biomass-fired bubbling fluidized bed boiler plant to Segezha Pulp and Paper Mill in the Republic of Karelia in Russia. The boiler, one of Valmet’s HYBEX types, will allow the use of wood residues and sludge from the papermaking process as fuels, such that the use of heavy oil can be reduced, and also includes an electrostatic precipitator for flue gas cleaning. The order is the third that the company has received from Russia in the last three years, indicating a high level of satisfaction from Russian customers.

LafargeHolcim in talks to sell part of Indian cement making business

LafargeHolcim, formed in last year’s €41 billion (US$45.6 billion) merger, is to sell off some of its Indian business to Indian conglomerate Nirma. The US$1.4 billion (€1.26 billion) deal, which includes debt, is in line with LafargeHolcim’s strategy to ‘streamline’ its business to make it more efficient in difficult market conditions. Like the steel industry, the cement industry is experiencing a supply glut, forcing prices down, which contributed to LafargeHolcim’s share price falling 40% over the past year. The company has already sold assets in South Korea and Saudi Arabia, and is looking at sales in a further nine countries. LafargeHolcim will retain some operations in India.

EDF to sell coal trading arm to Japan’s Jera Co

EDF is in talks to sell its coal trading arm EDF Trading to Jera Co of Japan. While the news is not official, sources have told The Wall Street Journal of the plans, which come amidst a general souring towards coal on the part of large European utilities, and a desire on the part of EDF to improve the balance of its books. EDF Trading was launched only in 2000, but has sometimes been ranked Europe’s largest coal importer, trading 662 mega-tonnes of coal in 2014. A sale to Jera Co – a joint venture between TEPCo and Chubu Electric Power Co – would further increase the Japanese company’s clout in international fuel markets, exactly the purpose for which the joint venture was set up. The same article suggests that EDF is also looking to sell its UK coal- and gas-fired plants.