Hard coal consumption jumps 70pc in 10...

Hard coal consumption jumps 70pc in 10 years.


http://www.theaustralian.com.au/business/opinion/hard-coal-consumption-jumps-70pc-in-10-years/story-e6frg9ex-1226223808982


IT seems that we ain't seen nothing yet when it comes to coal demand.
While Australia performs its King Canute act with a carbon tax, global use of coal is increasing at the rate of 600,000 tonnes a day. Over the past 10 years, consumption of hard coal - the high ranking anthracite, bituminous and some sub-bituminous coals - has lifted by 70 per cent. Surging demand for power generation will guarantee a fast-growing market for coal as coal-fired power stations remain globally the single largest source of electricity.

Here’s another astonishing fact: China’s domestic coal market is more than three times the size of the global coal trade.

These statistics are part of a 116-page report from the Paris-based International Energy Agency, titled Medium-Term Coal Market Report 2011. We made a brief reference to its conclusions in our Commodity Watch report yesterday, one of those being that traditional exporters of coal will be expected to meet the bulk of additional demand.

That is great news for Australia’s mines - but the report also provides a comprehensive picture of this country’s main competitors in the coal business.

Australia’s total coal exports in 2010 stood at 365 million tonnes. Indonesia is fast catching up with 336mt last year but a large proportion of that (287.8mt) was thermal (or steaming) coal for power generation, making Indonesia now the world’s biggest exporter of that type of coal. And, because of power demand scenarios, it will be thermal coal that surges in coming years, while metallurgical coal will depend on the fortunes of the world steel industry.

But Indonesia also has another advantage: Many of the miners in Kalimantan have easy access to navigable rivers, which allows them to move the coal by barge to either offshore loading terminals or directly to customers in nearby markets including Malaysia and Thailand. Australian coal producers, by contrast, face the well-documented problem of infrastructure that cannot keep up with increasing mine capacity.

Russia’s production of hard coal also increased in 2010, up 31mt to 248mt. The country is the third largest hard coal exporter in the world, most of that being thermal coal. While its traditional markets have been in Europe, Russia's coal sales to China increased six-fold between 2008 and 2009. Like Australia, however, there are infrastructure problems - the IEA report cited the railway system as the weakest link in the Russian supply chain. There is a combination of lack of rolling stock and enormous distances, some coal being hauled over 4500km, which means Russian miners face some of the highest transport costs in the world.

South African hard coal production hit 255mt in 2010 but exports have stagnated since 2005. Nevertheless, there has been a shift in destination away from Atlantic buyers and towards India.

Coming in at fifth place is Colombia, which exports mainly thermal coal. Most production comes from vertically integrated global mining companies with BHP Billiton, Anglo American and Xstrata partners in the Cerrejon and El Descano operations, which produce 62mt a year (of a total national output of 74.4mt).

Apart from the massive production out of the US, and the increasing output from Canada, the other significant players are Poland (although production is falling), Vietnam (supplying mainly China) and up and coming Mongolia, which lacks cost-efficient transport infrastructure, with most of its coal exports now going by lorry to the Chinese border and loaded on to trains there. A rail link is now under construction, but the Russians are also interested in connecting their rail system to Mongolia’s coal regions.