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Global use and production of coal

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The total global production of black coal (also referred to to 'hard coal') in 2008 was estimated by the World Coal Institute as being 5,845 million tonnes, a 67% increase since 1990. A further 951 million tonnes of the lower quality brown coal/lignite was produced.

As of December 2011, coal is estimated to provide 29.6% of global primary energy needs and generate 42% of the world's electricity, with the bulk being mined in-country, often in close proximity to power stations.[1] China, the U.S. and the European Union all boosted their consumption of coal in 2010, as global use of coal advanced 7.6 percent, and global energy consumption advanced at the fastest pace since 1973.[2]

According to a 2011 EIA report, the global coal mine production industry had a total revenue of $411.6 billion in 2010, representing a compound annual growth rate (CAGR) of 11.7% for the period spanning 2006-2010. Industry production volumes increased with a CAGR of 4.1% between 2006 and 2010, reaching 7.6 billion short tons in 2010.[3]

By 2012, coal use was declining in the U.S.: for first quarter 2012, the EIA reported that coal made up 36 percent of U.S. electricity — down from 44.6 percent in the first quarter of 2011. While the percentage of coal making up the overall U.S. energy mix decreased 8.6%, the percentage making up natural gas increased 8% over the same period, from 20.7% to 28.7% of total U.S. generation.[4]

While power generation accounts for the bulk of coal consumption, approximately 13% (approximately 717 million tonnes) is used for iron and steel production. The next most coal dependent sector is cement production.[1]

Major Coal Producers

Coal Production.jpg

The largest producers of hard coal, based on 2008 estimates,[1] are:

Coal Exporters

In 2005, only 18% of hard coal production is traded on the world coal market. Of the 815 million tonnes traded in 2006, 593 million tonnes was for power stations with 22 million tonnes being coking coals.[5]

The largest coal exporters, based on 2008 estimates[1], are:

  • Australia - 252 million tonnes (steam 115mt; coking 137 mt)
  • Indonesia - 203 million tonnes (steam 173mt; coking 30 mt)
  • Russian Federation - 101 million tonnes (steam 86mt; coking 15 mt)
  • South Africa - 62 million tonnes (steam 61mt; coking 1 mt)
  • Colombia - 74 million tonnes (steam 74mt)
  • USA - 74 million tonnes (steam 35mt; coking 39 mt)
  • PR China - 47 million tonnes (steam 43Mt; coking 4Mt).

The largest coal exporters, based on 2009 estimates[6], are:

  • Australia - 259 million tonnes
  • Indonesia - 230 million tonnes
  • Russia - 116 million tonnes
  • Colombia - 69 million tonnes
  • South Africa - 67 million tonnes
  • USA - 53 million tonnes
  • Canada - 28 million tonnes

In May 2011, Reuters reported that total U.S. coal exports could amount to around 100 million tons (91 million tons) in 2011, according to analysts, leaving only Australia and Indonesia above the U.S. in world coal export rankings, and putting the U.S. above Russia, Colombia and South Africa.[7]

Coal Importers

Approximately 59% of global traded coal consumption is in Asia. The largest coal importers, based on 2008 estimates[1], are:

  • Japan - 186 million tonnes (steam 128mt; coking 58 mt)
  • Korea - 100 million tonnes (steam 76mt; coking 24 mt)
  • Chinese Taipei - 66 million tonnes (steam 60mt; coking 6 mt)
  • India - 60 million tonnes (steam 31mt; coking 29 mt)
  • Germany - 46 million tonnes (steam 37mt; coking 9 mt)
  • China - 46 million tonnes (steam 35mt; coking 11 mt)
  • UK - 44 million tonnes (steam 37mt; coking 7 mt)

The largest coal importers, based on 2009 estimates[8], are:

  • Japan - 165 million tonnes
  • China - 137 million tonnes
  • South Korea - 103 million tonnes
  • India - 67 million tonnes
  • Chinese Tapei - 60 million tonnes
  • Germany - 38 million tonnes
  • UK - 38 million tonnes

Terminology

  • Steaming coal - refers to coal used for power generation purposes;
  • Coking coal - coal used or iron and steel production.

Coal production forecasts for 2010 and beyond

In early 2010, ABARE, an Australian government economic modeling and statistics agency, outlined what it thought the key trends would be over the next five years affecting thermal[9] and metallurgical coal demand and production.[10]

Thermal coal

For thermal coal, ABARE forecast an increase in contract prices over the 2010-2015 period as a result of increased demand from India, the Republic of Korea, Chinese Taipei and Japan.[9]

ABARE also projected a 19% increase in thermal coal imports from 730 million tonnes in 2009 to around 872 million tonnes in 2015 which would predominantly be met with increased exports from Australia, Indonesia and Colombia. These countries, ABARE noted, have "expanded mine and infrastructure capacity." ABARE also noted that "production costs are projected to increase over the medium term as coal deposits which are deeper underground and further away from existing infrastructure are developed".[9]

Underpinning the rapid increase in demand is forecast growth in coal-fired generating capacity in Asia and India and China in particular. ABARE forecast that China's imports would increase to 100 million tonnes in 2015 from 85 million tonnes in 2010. In particular, ABARE noted that the main coal producing regions in China are "distant from large consuming regions on the south-east coast. Increasing transportation costs and rail infrastructure constraints associated with the increasing geographic distance between production and consumption centres will continue to support thermal coal imports over the outlook period."[9]

ABARE also projected that imports into India are expected to double over the 2010 to 2015 period. Even though Indian coal production is rapidly expanding ABARE noted that most of the deposits are "distant from the coastal sites of a number of the planned power stations. This could result in high transport costs and potentially unreliable deliveries."[9]

Underpinning the rapid growth in Indian demand are the plans for the construction of nine 'ultra mega' 4,000 megawatt power stations which would each consume up to 16 million tonnes of coal, the first of which is scheduled to come online in 2012 and another in 2013.[9]

Other Asian countries are expected to contribute to increased demand for coal albeit at lower rates than India and China. ABARE projects that Japanese coal demand will increase by approximately 5% over the 2010-2015 period due to limited increased in coal-fired power supply as a result of the expansion of nuclear, efficiency and renewables. While new coal-fired power stations commissioned in Korea in 2008 and 2009 led to a jump in demand in coal imports, ABRE expects imports to slow to approximately 2% a year as the expansion program is completed.[9]

Europe on the other hand would at best return to the level of demand of a few years earlier. The main exception is expected to be increased imports into Germany due to the phase out by 2018 of subsidies supporting German coal mines.[9]

ABARE estimates that increased demand for coal imports in the Asian region will predominantly be met with coal from Indonesia, Australia and South Africa while coal from Colombia will supply the Atlantic market of Europe and North America. ABARE estimates that Australian exports will jump from 141 million tonnes in 2009-2010 to 200 million tonnes in 2014-2015.[9]

Countries thermal coal import projections

ABARE projects that the largest increases in coal imports in the period from 2009 to 2015 will come from[9]:

  • Asia in total from 434 million tonnes to 544 million tonnes comprising:
    • Japan from 116 million tonnes to 122 million tonnes;
    • China from 84 million tonnes to 100 million tonnes;
    • India from 45 million tonnes to 90 million tonnes;
    • Republic of Korea from 84 million tonnes to 95 million tonnes;
    • Malaysia from 16 million tonnes to 20 million tonnes;
    • other Asia from 32.6 million tonnes to 46 million tonnes.
  • Europe, which imported 222 million tonnes in 2008, dropped to 212 million tonnes in 2009 but is expected to slowly increase imports to 221 million tonnes by 2015;
  • demand from elsewhere in the world is projected to increase82.7 million tonnes to 105.7 million tonnes in 2015.

Metallurgical coal

In its March 2010 commodities forecast, ABARE projects the the demand for metallurgical coal is likely to expand rapidly in the 2010-2015 period as a result of rapid industrialisation in developed countries, especially China and India, and economic recovery in the OECD countries. ABARE projects that global steel production in 2010 is likely to return to approximately the same pre-global financial crisis level it as was in 2008. By 2015, ABARE projects that global steel consumption will have risen from 1.3 billion tonnes to 1.8 billion tonnes, an average annual growth rate of 6%.[10]

ABARE notes that Chinese steel demand -- driven by increasing domestic middle class consumption of consumer products as well as in housing and infrastructure projects -- will increase by 9% per annum. ABARE also estimates that India's consumption of steel is likely to increase at the same rate. While ABARE projects annual growth rates in the range of 4-5% for the United States, Japan and the European Union it expects that by 2015 steel consumption will be approximately 2% lower than in 2008.[10]

By 2015, ABARE projects that approximately 61% of steel production will be concentrated in Brazil, Russia, India and China. "The major contributing factors to the increasing concentration of steel production in these major developing economies include strong domestic demand, relatively low production costs and, in some cases, large domestic reserves of raw materials," ABARE states.[10]

ABARE also notes that while demand will be strong for metallurgical coal, production costs are likely to be higher in the main producing countries. "In China, metallurgical coal will be increasingly sourced from deeper deposits in locations more remote from existing infrastructure, which will result in higher production and transport costs. New mines in Australia are also likely to have higher production and transport costs compared with existing mines. Capital costs have increased over the past five years and the cost of using new infrastructure is significantly higher compared with existing port and rail facilities. Therefore, prices for hard coking coal are unlikely to remain less than $100 a tonne for any sustained period," ABARE notes.[10]

The three major growth markets for metallurgical coal are expected to be Brazil, India and China with imports over the 2010-2015 period to respectively be 12%, 13% and 6% per annum. ABARE estimates that over the period these three countries alone will account for just under half of all the growth in demand for metallurgical coal. While demand for metallurgical coal imports into Japan and the European Union dropped dramatically in 2009, ABARE estimates that these will gradually restart mothballed steel mills and replenish stockpiles. However, by 2015 ABARE expects metallurgical coal demand to still be less or equal to the level of demand in 2008.[10]

ABARE projected that Australia will remain by far the largest exporter of metallurgical coal, growing to 183 million tonnes from 135 million tonnes in 2009. In particular, ABARE notes that major infrastructure expansions such as the Dalrymple Bay Coal Terminal and the Jilalan Rail Yard. It also notes that a series of further infrastructure expansion projects -- including the Abbot Point Coal Terminal expansions, the Hay Point Coal Terminal expansion, Wiggins Island Coal Terminal and Balaclava Island Coal Terminal -- will be dependent on further coal mine establishment. Some of the larger mines under consideration include "the 5.5 million tonne annual capacity Caval Ridge, into which BHP Billiton Mitsubishi Alliance has injected $US267 million (for Caval Ridge, Peak Downs and Hay Point) to accelerate development, the 4.6 million tonne a year Eagle Downs project, and the 2 million tonne a year Lake Vermont project."[10]

Canada in particular, could rapidly expand production back to pre-global financial crisis levels. ABARE also foreshadows that the global supply of metallurgical coal could be supplemented by new mines being established in Mozambique and Mongolia.[10] (See Mozambique and coal and Mongolia and coal for further details).

Countries metallurgical coal import projections

ABARE projects that world metallurgical coal imports in the period from 2009 to 2015 will increase from 211 million tonnes to 304 million tonnes. It projects that the largest increases in coal imports will come from[9]:

  • Europe, which imported 42 million tonnes in 2009 is expected to slowly increase imports to 53 million tonnes by 2015;
  • Japan from 46 million tonnes to 57 million tonnes;
  • China from 34 million tonnes to 47 million tonnes;
  • India from 21 million tonnes to 44 million tonnes;
  • Republic of Korea from 16 million tonnes to 30 million tonnes;
  • Taiwan from 5 million tonnes to 7 million tonnes;
  • Brazil from 9 million tonnes to 18 million tonnes;

Metallurgical coal import export projections

ABARE projects that the main metallurgical coal exporters in the period from 2009 to 2015 will be[9]:

  • Australia from from 135 million tonnes to 183 million tonnes;
  • Canada from 20 million tonnes to 36 million tonnes;
  • United States from 33 million tonnes to 40 million tonnes;
  • Russian Federation from 17 million tonnes to 26 million tonnes;

Global production outlook

Addressing potential investors in Manhattan on June 17, 2010 Gregory Boyce, the chairman and chief executive or Peabody Energy, stated that “a long-term supercycle for coal,” driven by rapidly growing demand in Asia, would be extremely profitable. A company press release explained:

Boyce observed that coal has been the world’s fastest-growing fuel this past decade, with demand growing at nearly twice the rate of natural gas and hydro power and more than four times faster than global oil consumption. “It’s stunning that any mature commodity could expand nearly 50 percent in a decade and speaks to the strong appetite for the products we fuel, as well as coal’s abundance and stable cost,” he said. Coal demand is also expected to grow faster than other fuels in coming decades.
Asia-Pacific nations are leading a historic global build-out in coal-fueled electricity generation. More than 94 gigawatts of new generation are expected to come on line in 2010, representing 375 million tonnes of coal consumption per year. If growth continues at the current pace, generators would add another 1 billion tonnes of new coal demand every three years.

Richard K. Morse of Stanford responded to Peabody's statement saying, "While Peabody’s PR has taken some creative turns in the past (framing access to coal as a human right), this document reflects a reality that we are watching closely at Stanford: Coal is the world’s fastest growing fossil fuel (for the 8th year now) and likely will be for the next 10-20 at least. According to BP’s 2010 Statistical Review of World Energy released this month, coal now occupies a greater share of the world’s energy mix than at any point since 1970."[11]

Articles and Resources

Sources

  1. 1.0 1.1 1.2 1.3 1.4 World Coal Institute, "Coal Statistics", World Coal Institute website, December 2011.
  2. Mathew Carr and Rachel Graham, "Global Energy Use Advances at Fastest Pace Since 1973 on Coal, BP Says" Bloomberg, June 8, 2011.
  3. "Global Coal Mine Production" Research and Markets, March 2011.
  4. "EIA Short-term Energy Outlook," EIA, May 8, 2012.
  5. World Coal Institute, "The Global Coal Market", in The Coal Resource: A Comprehensive Overview of Coal, World Coal Institute, 2005.
  6. "Top Coal Exporters," World Coal Institute, accessed May 2011]
  7. Bruce Nichols, "Analysis: U.S. to be a top coal exporter again, thanks to Asia" Reuters, May 12, 2011.
  8. "Top Coal Importers (2009e)" World Coal Institute, May 9, 2011]
  9. 9.00 9.01 9.02 9.03 9.04 9.05 9.06 9.07 9.08 9.09 9.10 9.11 Rebecca Petchey, Michael Lampard and Alan Copeland, Thermal coal", Australian commodities, ABARE, Volume 17 number 1, March quarter 2010, page 152-159.
  10. 10.0 10.1 10.2 10.3 10.4 10.5 10.6 10.7 Robert New, Steel and steel-making raw materials", Australian commodities, ABARE, Volume 17 number 1, March quarter 2010, page 168-178.
  11. "The Coal Age Continues" Andrew C. Revkin, New York Times, June 18, 2010.

Related SourceWatch articles

Resources

  • CARMA: Carbon Monitoring for Action, CARMA is a database developed by The Center For Global Development which displays the power output and carbon emissions for the largest power plants around the world.

External Articles

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