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Coal and Clean Coal Report Ed 1 2011
NRG Expert, July 2011, Pages: 357
For the first time China became a net importer of coal last year. Demand from Southern and South Eastern provinces was met by cheaper imports from Indonesia and Australia rather than more expensive coal from the provinces of Shanxi and Inner in the north, due to logistic costs. Furthermore the rail network in China can only transport half of the country’s demand, and despite investments in the sector is unlikely to meet demand in the near-term. Domestic supply is also likely to diminish owing to the country’s strategy of consolidating the nation’s mines to eventually close unsafe and inefficient mines. Consequently China is ensuring security of supply through a mixture of bi-lateral trade agreement and acquisitions of overseas mining assets. One of the most ambitious is China’sCoal Geology Engineering Corporation and Wanbei Coal Electricity Group’s plan to develop a potential 10 billion tonne coal resource in Queensland, Australia. Bi-lateral trade agreements have been signed with Mongolia, North Korea and Vietnam. Only time will tell whether China will rely more on seaborne or overland imports to meet demand; although, for the latter, improvement’s in rail infrastructure will be needed.
Research and Analysis Highlights:
In the near and long-term India, China and perhaps Brazil are expected to drive growth for coking coal for the domestic steel sector following projections of strong growth in steel production and consumption in these countries. Demand for coal will be driven more by China than India, in the former coal will be increasingly used to produce a liquid fuel and chemicals such as olefins, a long-chain polymer synthetic fibre, to reduce the country’s reliance on imports. Australia, Indonesia and South Africa are expected to remain as major exporters, with growth in exports from Russia, Mongolia and other countries in the region to meet demand from China and, to a lesser extent, India. For the US mining sector, operations in the Power River Basin region may increase. But will be balanced out by a reduction in output from the East Appalachian region that mainly uses invasive mountain-top mining operations. Any resurgence in the US coal mining sector will only occur with improved clarity regarding the permitting process, and incentives ensure domestic coal is cheaper than imports.
The switch from underground to surface mining is expected to continue along with the consolidation of mining assets. More mergers and acquisitions involving big players are likely.
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