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Britain is set to encounter widespread power shortages within eight years due to the country's switch to cleaner energy generation, according to forecasts contained in a government report. The planned closure of coal and gas-fired power stations and the wait for new nuclear plants to be built will both hit power supplies, the report added.

A growing reliance on intermittent renewable energy sources, such as wind, will exacerbate the problem, the report stated. The figures were contained in a little-publicised appendix to the British government's plan for the transition to a low carbon economy released in July.

Energy and Climate Change Secretary Ed Miliband said at the report's launch that 40 per cent of Britain's electricity will have to come from nuclear, wind, solar, marine and cleaner coal, compared with a fifth today.

The transition is needed to help meet its legally-binding target of cutting emissions by 34 per cent by 2020. The Department of Energy and Climate Change said it was alarmist for UK newspapers to raise the prospect of a return to the three-day week of the 1970s, when energy shortages forced factories to limit their operating hours.

Plans for new nuclear, gas and clean coal supplies were well under way, it added. It said in a statement. The public should be reassured the UK energy system is one of the most resilient and responsive in the world.

The level of Expected Energy Unserved, the shortfall between supply and demand, could reach 3,000 megawatts per hour by 2017 and 7,000 megawatts per hour by 2025, the report said. It is currently close to zero.

The opposition Conservatives said Britain needs to replace a third of its generating capacity over the next decade and that the ruling Labour Party had left it perilously late.

Britain faces blackouts because the Government has put its head in the sand about Britain's energy policy for a decade, said Conservative energy spokesman Greg Clark. The International Energy Agency, which represents oil consuming nations, has warned of a possible energy crunch caused in part by falling investment in the energy sector.

Index down

Falling oil and coal prices drove Canada's Industrial Product Price Index down 0.5 per cent in July, reversing the 0.5 per cent increase registered in June, Statistics Canada reported Friday. The index is down seven per cent from the peak reached in August 2008.

Lower oil prices also dragged the Raw Materials Price Index down by 3.8 per cent in July following increases of 6.2 per cent in June and 2.2 per cent in May. Oil and coal prices fell 5.2 per cent in July after three consecutive monthly increases, including a jump of 10.8 per cent in June.

Prices under pressure

China is set to return to role of coal exporter as the deadline for thousands of small coal mines in its Shanxi province to reopen after being shut in an attempt to consolidate the sector expired. A major prop for global coal prices this year quietly expired at midnight this Monday, the deadline for small, dangerous mines in China's top producing province to merge into larger operators.

Shutdowns in Shanxi earlier this year were a lucky break for coal suppliers in Australia, Indonesia and Vietnam, helping turn China into a net importer just as the global financial crisis demolished demand from other countries.

Now the province, source of 25 per cent of China's coal, is poised to let many small mines reopen. But a recent fatal explosion at a mine in Shanxi underlines that progress on safety is far from assured, while mines may be slow to return to normal production after the enforced mergers.

Signing a framework agreement for a merger is much easier than actually finalising the price of the deal, said Wang Ye, an analyst at CITIC Securities. It's easy to get engaged, but marriage is a totally different matter.

Small mines contribute roughly a third of Shanxi's coal output. For coking coal, the more valuable grade used by steelmakers, small mines contribute even more, as most coking coal resources are controlled by small mines, analysts said.

As the consolidation drive got underway after a major mine blast in late February, production from Shanxi failed to show the typical sharp recovery from the Lunar New Year holiday trough. Output for Shanxi in the first seven months of 2009 fell by 12 per cent, or 42 million tonnes, to 318 million tonnes - a decline almost equal to the huge rise in imports that flipped China from a net exporter to a major net buyer of coal.

The world's top producer and consumer shipped in a net nearly 50 million tonnes of coal in the seven months to July, compared with 4.7 million tonnes of net exports in all of 2008. The shutdowns hit Shanxi hard, making it the only province to see its economy shrink in the first half of this year. That could prompt local officials to take a more lenient view of restarts at small mines, which make up 80 per cent of the province's total.

One of China's top power producers, Huadian expects Shanxi to produce 400 million tonnes of coal in the second half of the year, about 60 per cent more than in the first half of the year and about 17 per cent up from the same months of 2008.

If that proves accurate, Shanxi would pump enough coal into the Chinese market to deflate the appetite for imports. Liu said a third of Shanxi's output would be coking coal, so the impact would not be confined to the thermal coal market.

Revenue jump

PT Adaro Energy Tbk Indonesia's No. 2 coal producer by market value, increased second-quarter net profit seven-fold to 1.1 trillion rupiah ($109.5 million). Adaro, which listed on Indonesia's stock exchange last year and has a market capitalisation of $4.3 billion, said that sales volume in the first half fell 11 per cent to 17.8 million tonnes of coal, from 20.1 million tonnes in the same period a year ago.

It did not disclose its average selling prices for its coal. Adaro produced 18 million tonnes of coal in the first half, out of a full-year target at 42-45 million tonnes. In 2008, it produced 38.5 million tonnes of coal.

The company said in a statement that first-half net profit jumped 16-fold to 2.25 trillion rupiah, from 140 billion rupiah in the same period last year, due to higher coal prices, while revenue rose 64 per cent to 12.9 trillion rupiah.

Second-quarter net profit rose to 1.10 trillion rupiah in the second quarter, from 152 billion rupiah a year ago, while revenue jumped 44 per cent to 6.36 trillion rupiah.

Australia delay

Australia will lose out on coal export revenue if a plan designed to increase cargo-handling efficiency at Newcastle Port, the world's biggest harbor for the fuel, is delayed, the regulator said.

Interim authorization for the plan, which would require coal producers to sign contracts of at least 10 years to export through the port, was scrapped after legal documents weren't submitted by an August 31 deadline, the Australian Competition and Consumer Commission said.

The new process would replace a so-called common user system that obliges the harbor to accept a producer's coal for export at any time, Port Waratah Coal, operator of the site's two terminals, said in June. A failure to meet the deadline resulted after one producer declined to agree on the plan, Joe Tripodi, New South Wales minister for Ports and Waterways, said in a separate statement.

It is disappointing one producer is holding out on a final solution that all other coal producers have accepted as necessary for the future of the Hunter coal industry, Tripodi said. Rio Tinto Group, Xstrata Plc and BHP Billiton Ltd. are among mining companies that ship coal through the harbor.

Job market

Coal mines continue to expand in Kentucky. Armstrong Coal is opening a new mine in Ohio County, which could bring several hundred new jobs to the area, but they're hoping to get some help with that. Ohio County Judge Executive David Jones is excited about the possibility of 600 or 700 new jobs at Armstong Coal by the end of this year. The coal company is working on expanding to four mines in Ohio County by the end of 2009. That expansion brings with it some major tax incentives. The county is concerned about incentives Armstrong Coal is asking for in the way of occupational tax breaks.

Results out

Joy Global Inc's (JOYG) fiscal third-quarter profit rose 10 per cent, and the mining equipment company raised its income outlook for the year on lower costs and improving demand for mined commodities. The company said Wednesday that it expects earnings of $4 to $4.20 a share for the fiscal year ending September 30, up from previous guidance of $3.80 to $4. But new orders continued to shrink in the third quarter, and Joy Global warned that it expects new orders next year to remain about 30 per cent below the current level of orders shipped.

Joy Global's stock in early trading was up 1.7 per cent at $37.75.

The Milwaukee company said the markets for mined commodities, such as copper, improved in the third quarter, with solid demand coming from China and India, as well as from Western Europe and Japan. Joy Global had a third-quarter profit of $124.3 million, or $1.21 a share, up from $113.1 million, or $1.03 a share, a year ago. Sales in the quarter rose 6 per cent from a year ago to $956.4 million.

Felix Resources Ltd, the Australian coal producer being acquired by Yanzhou Coal Mining Co, said full-year profit jumped 42 per cent to a record on price gains. Net income was A$267.4 million ($225 million), or 136 cents a share, in the 12 months ended June 30, from A$188.5 million, or 96 cents, a year ago, Brisbane-based Felix said.

Contract prices for power-station and steelmaking coal were at records in Japanese fiscal year to March 31 on increased demand in Asia. Yanzhou, China's fourth-biggest coal mining company, has offered A$3.5 billion for Felix.

The company is in good shape going into 2010 and is basically in a sold-out position until mid-2010, provided there is no more global financial shocks, which may cause a slowdown like that suffered in late 2008, Felix said in the statement.

Felix rose 0.1 per cent to A$17.37 on the Australian stock exchange. The stock has more than doubled this year and has a market value of A$3.4 billion. The company will pay a final dividend of 50 cents a share.