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Asian twins show huge appetite for coal

World coal demand is forecast to grow by 1.2 billion tonnes in the next five years – and more than 80 per cent of that projected global demand expected to come from India and China.

Peabody Energy, the world’s largest private sector coal company, said today that India’s demand for coal would swell from 726 million tonnes in 2012 to 920 million tonnes by 2017, a growth of 26.7 per cent.

Demand for coal in China would grow by 20.2 per cent to 4.89 billion tonnes from 4.07 billion tonnes in 2012, Vic Svec, senior vice-president, global investor and corporate relations, of Peabody Energy Corporation will tell attendees at the UBS Coal Conference in Boston, Massachusetts later today.

Peabody submitted a copy of Svec’s presentation in an SEC filing on Wednesday.

Svec said that expected steel production growth would require an additional 150 million tonnes per year of metallurgical coal in 2017.

Peabody is betting that India will show the largest thermal coal import growth during the next five years.

The energy giant forecast that India’s imports of coal would surge from 137 million tonnes in 2012 to 165 million tonnes in 2013 and then vault to 265 million tonnes in 2017 – a growth of 93.4 per cent in five year’s time.

China’s coal imports are forecast to grow more modestly at 38.4 per cent from 289 million tonnes to 400 million tonnes between 2012 and 2017.

Peabody is clearly salivating at the prospect of a huge surge in coal import demand at a time when “India’s coal demand lags production” and high cost metallurgical coal supplies are declining. The company is clearly expecting a strong rebound in investments in met coal which have been deferred or cancelled after met-coal prices tumbled to a low in mid-2013.

The demand for coal in India and China will be driven by thermal power projects with 70 giga watts of coal-fired electricity generation forecast in India and 200GW in China.

It said new port projects were already underway to deal with the anticipated jump in coal imports.

Svec said coal was expected to pass oil as the world’s largest energy source in the coming years – a forecast predicated on the fact that coal grew twice as fast as the average of the other major fuels in the past decade.

Peabody, which has 9 billion tonnes of proven and probable coal reserves and owns, through its subsidiaries, majority interests in 28 coal operations located throughout all major US coal producing regions and in Australia, is relishing the prospect of a surge in coal imports in India and China.

The presentation noted that met coal exports from Mongolia were down 35 per cent year to date and supplies from Mozambique – where several Indian players have acquired interests in coal assets – have been struggling to grow.

It said that projected seaborne thermal coal demand would grow from 910 million tonnes in 2012 to a projected 1.12 billion tonnes in 2017, a straight 23 per cent growth. Asia accounts for all seaborne thermal growth, the Peabody presentation said.

During the year ended December 31, 2012, Peabody sold 248.5 million tonnes of coal to electricity generating and industrial plants around the world.

Source: The Telegraph, Kolkata