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European coal and steel crucible

Benelux ports are key nodes in the global coal and dry cargo trades, but the drift of European energy policies away from fossil fuel signals change for power consumption needs and bulk terminals.

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Three months after the Dutch general election and Prime Minister Mark Rutte has no ruling cabinet – and energy policy is a sticking point as he seeks a coalition of four political parties. As elsewhere in Europe, the role of coal is a core debate, even as it continues to power Dutch industry and homes, and keeps its dry bulk ports busy. But the re-elected liberal leader, with an economy delivering 2% growth, is out to ensure that any energy transition pledge does not hinder this progress.

 

Meanwhile, the Dutch ports of Rotterdam and Amsterdam are the main handlers of imported coking coal and steam coal in Northwest Europe, along with Antwerp in Belgium. Much of the coal imported via Rotterdam and Amsterdam is bound for coal-fired power stations in Germany and elsewhere in Europe. In 2015, Dutch coal imports were 12.4 Mt, comprising 8.9 Mt of steam coal and 3.5 Mt of coking coal. The main suppliers were Colombia, South Africa, the USA and Russia.


Coal imports are a main source of supply for the Netherlands’ remaining power stations, which provide 15% of its energy supply. Imports have played an increasing role for domestic use for almost half a century since Dutch coal production ceased by the mid-1970s (it had centred on the deep shaft mines of South Limburg and opencast extraction on the lignite basin to the west of Cologne).


But, the days of a Dutch coal power sector have looked numbered, despite recent investment in new coal-fired capacity. Five Dutch coal-fired power stations commissioned in the 1980s were closed last year, in line with the Dutch government’s 2013 Energy Agreement for Sustainable Growth. The Netherlands now has five remaining coalfired power plants with a combined capacity of 5.7 GW, two of which date from the 1990s and are under review.


New and old


German power giant RWE has continued to operate the 1993-built, 600 MW Amercentrale 9 in Geertruidenberg, while Swedish utility group Vattenfall has kept the 1994-built 630 MW coal-fired unit at Hemweg Power Plant in Amsterdam.

 

The veteran power plant duo also co-fire biomass, although consumption has fluctuated as Dutch policy opts for coal in the short-term, and remains ambivalent about its medium to long-term stance on wood pellet-based power.


The Netherlands’ three modern coal-fired facilities have only been in operation since 2015, and together offer 3.5 GW of power capacity. Each of the facilities has the latest ‘supercritical’ steam technologies for high-energy efficiencies. Engie’s 800 MW Maasvlakte power plant can also burn biomass. The other two are the 1.6 GW RWEEssent Eemshaven plant, near Groningen, and Uniper’s 1.1 GW Maasvlakte 3 plant in Rotterdam.

 

Meanwhile, Dutch enthusiasm for carbon capture and storage (CCS) has lost some of its momentum. The ROAD project (Rotterdam Opslag en Afvang Demonstratieproject), which is backed by Uniper and Engie, has explored the capture of 1.1 Mtpa of CO2 from the Maasvlakte 3 plant for pipeline transport and storage in a depleted North Sea gas reservoir. Meanwhile, the Dutch government is undecided over the role of coal in its future energy policy.


Coal was the main power source for the Netherlands in 2015, however, and accounted for 37% of the energy mix. The Dutch government’s economic ministry has tallied the bill for closing all of the coal plants by 2020 at €7B. Although the fate of the remaining Dutch coal-fired power stations is uncertain, the coal lobby has argued that further closures would force the Netherlands to import electricity from more polluting power stations in Europe.

 

Understandably, the Dutch government is reluctant to close three state-of-the-art coal-fired plants so soon after they opened. It also has options to cut emissions through biomass co-firing and/or retrofit to CCS technology. Dutch energy strategy has also looked to integrate wind energy with coal-fired power plants, and it recognises that the Netherlands’ coastal energy complex offers access to coal terminals at deepwater ports, and grid connections to Europe.


But the Dutch parliament has other ideas and gave its non-binding support last September for a 55% cut in CO2 emissions by 2030, in line with the Paris climate agreement, which would require the closure of all coal-fired power plants. In 2015, the government was also ordered by a Dutch court to cut emission by a quarter by 2020. The Hague has appealed the ruling, and prepared a climate package to limit coal plant closures, while funding alternative initiatives, including renewables and CCS.


In the meantime, RWE, Uniper, and Engie have had to slash the valuations of their new Dutch coalfired plants to €2.5B from €6B, according to UK lobby group the Institute for Energy Economics and Financial Analysis. The lower
cost of renewables and the rising price of coal have slashed margins for power plants. RWE has written down to €1.3B the value of its Dutch conventional fleet, including coal plants, while the cost of Eemshaven plant alone was €3B.


Meanwhile, two Dutch coal plants have taken a hit to their book value for the second time in two years. The Maasvlakte 3 plant cost €1.7B to build, but was worth €700M at the end of last year, according to Uniper’s annual report – less than half its €1.5B value at the start of its first full year of operations in 2016. Engie has written €168M off its Netherlands conventional power generation assets, of which its Maasvlakte facility is the most substantial.


Dutch decisiveness


As Dutch politicians debate the role of coal, the country’s bulk ports are addressing decisively the challenge to their future. In March, the Port of Amsterdam said it expects its coal terminals will be redundant by the end of the next
decade as the energy transition rolls out in the Netherlands, Germany and elsewhere in Europe. Europe’s second largest coal port predicts it will stop handling coal by 2030.


Amsterdam’s coal volumes are already in decline, and fell by 7.5% to 16 Mt in 2016, with a further 29% slump expected over the next five years. However, overall transhipment volumes were up by 1% to 79 Mt last year, driven by a 5% rise in bulk cargo other than coal, including ores and fertilisers. Amsterdam’s OBA terminal is handling 22 Mtpa of dry bulk commodities, including coal for the steel, power and mining sectors.


However, OBA has expressed surprise at Port of Amsterdam’s March announcement. The stevedore has called for “better coordination” from the port, and the need to serve existing customers in the long-term, as well as to diversify. OBA points to the steel industry, which it says will continue to depend on coking coal imports. Tata Steel’s Ijmuiden works, with a 7 Mtpa crude production capacity, is the main consumer of coking coal in the Netherlands.


Coal is also handled in Amsterdam-Ijmuiden by Rietlanden Terminals at the Afrikahaven and the Amerikahaven facilities. The 2.6 Mt capacity facilities handle 7.2 Mtpa of transhipment cargo, including other dry bulk cargo such as scrap iron, as well as coal, and have five floating cranes to load and unload ships moored on dolphins. Afrikahaven has a quay length of 1.2 km, and 2 Mt storage capacity, while Amerikahaven has a 1 km quay length.

 

Biomass plant


Rotterdam has continued to harbour ambitions for the biomass market, and to expand on the 0.5 Mtpa of wood pellets it handles from the US, Canada and the Baltic. With the Maasvlakte power stations able to co-fire 20%- 30% biomass, Rotterdam has set aside an 80-hectare site on Maasvlakte 2 for bio-industries. However, biomass imports have halved since 2014, as the Dutch power sector continues to opt for coal.

 

Rotterdam wants a biomass throughput of 8-10 Mtpa of by 2020, but the expansion will hinge on government subsidies for biomass. Rotterdam’s stevedores are already investing in new dry bulk facilities to diversify from coal. In May, HES International, owner of European Bulk Services (EBS), announced new warehouse capacity to cater for biomass and bulk products that require covered storage. EBS will erect 126,000 m2 of storage sheds at Laurenshaven,
and a 40,000 m2 shed at Europoort.

 

Last year, HES started to expand EBS’s covered capacity with a new 60,000 m2 multipurpose dry bulk shed at Laurenshaven. With a long-term contract for the facility, construction work started last summer, and it opened earlier this year. The new Laurenshaven warehouse, together with a new crane, will be sited on land previously used for coal storage. The multipurpose warehouses have brought EBS’s covered storage capacity to 691,000 m2.


Jan Vogel, CEO of HES, wants EBS to be the European leader in handling bulk products that require covered storage, such as biomass, agricultural products and specialty minerals. Vogel comments: “We are making visible progress in expanding our warehouse facilities – a direction that we are pursuing in other European ports.”


Jan de Wit, managing director of EBS, says the facilities will reduce the cost for floating storage in barges, while improving operational quality and safety.

 

Benelux bulk

 

Dry cargo via Rotterdam is rising this year, up 3.6% yearon-year to 21.7 Mt in the first quarter, with coal transhipment up 1.5% to 8 Mt. Europees Massagoed Overslag (EMO) on the Maasvlakte remains Rotterdam’s largest coal terminal, with a 1.4m quay and five cranes that can handle four Capesize bulkers at a time and 200,000t of coal daily. EBS has a coal terminal in Botlek and facilities in Europoort for ship-to-ship transfers between Capesize ships and barges or coasters.

 

Rotterdam’s handling of iron ore and scrap was up slightly by 0.5% to 7.9 Mt over the first three months of the year. German steelmakers ThyssenKrupp and Hü ttenwerke Krupp Mannesmann are the owners of EECV terminal, which supplies their iron ore and coal needs. Smaller coal consignments are handled by Rotterdam Bulk Terminal, BSR van Uden Stevedoring and ZHD Stevedores. Agribulk via Rotterdam was up by 14% to 2.9 Mt in the first quarter of 2017.

 

Coal imports into Belgium’s main dry bulk port of Antwerp, largely from Russia, Australia and US, are also transhipped across Europe, and the Belgian steel sector. However, Antwerp’s coal imports were in freefall in 2016, down by 34% from a year earlier to just over 1 Mt, amid the changes within its power sector. Iron ore volumes were also down sharply, by 11% to 2.1 Mt, and overall dry bulk volumes dropped 9% to 12.6 Mt.

 

The port of Ghent is handling more dry bulk, up 1 Mt last year to 17.7 Mt, followed by a 38% year-on-year surge to 5.4 Mt over the first quarter of 2017. Belgium’s largest dry bulk port, which serves ArcelorMittal’s steelworks, handled 2.1 Mt of ore, up 80%, and 0.8 Mt of coal, a 47% increase, in the first quarter of this year.

 

Zeebrugge also handled more dry bulk last year, up 13% to 1.5 Mt, buoyed by construction sector demand for sand and grit, as well as growing volumes of agribulk and iron ore.

 

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