coal demand to grow over the next 5 years

Coal demand to grow by 600 000 t/d over next five years, IEA warns


By: Terence Creamer
14th December 2011

JOHANNESBURG (miningweekly.com) - Global coal demand will continue to expand “aggressively” over the coming five years, the International Energy Agency’s (IEA’s) inaugural ‘Medium-Term Coal Market Report 2011’ states, while also warning that infrastructure bottlenecks and an expected shift to poorer quality deposits could place upward pressure on costs and prices.

In fact, the IEA report, which was released this week, forecasts that average coal demand would grow by 600 000 t/d over the period, despite calls for efforts to be intensified to remove carbon from the energy system. The growth of average daily coal demand during the last decade was over 700 000 t, when global hard coal demand grew by more than 70% from 3.7-billion tons in 2000 to an estimated 6.3-billion tons in 2010 – a compound annual growth rate of 5.5% a year, which was the highest growth rate of all fossil fuels.

Coal demand, the IEA said, would continue growing in the outlook period, but the pace of growth would slow.

The increase in demand would be underpinned by surging power generation in emerging economies, especially China and India, and would place upward pressure on mining costs and coal prices, especially as poorer quality deposits were exploited to satisfy demand.

Despite the rise of new exporting countries, such as Mongolia and Mozambique, traditional exporters were expected to meet the bulk of the demand growth. Six countries, including Indonesia, Australia, Russia, South Africa and Colombia, currently account for more than 80% of global coal exports.

The report also cautioned that the infrastructure bottlenecks experienced in recent years, which had caused coal prices to more than triple, could again place pressure on markets and prices. This could, the IEA argued, test the traditional view of coal as a cheap and secure energy resource.

Executive director Maria van der Hoeven said the report served to highlight the significant challenges facing efforts to transform the global energy system into one that was sustainable, secure and low-carbon.

“Policymakers must be aware of this when designing strategies to enhance energy security while tackling climate change,” she said.

The report raised particular concern about the global implications of China’s coal appetite, noting that events and decisions in China could have an “outsized effect” on coal and electricity prices around the world.

China’s domestic coal market was more than three times the global coal trade. Further, while only 15% of global coal demand was met through international trade, more than half of global coal demand during the outlook period was projected to arise from China.

“What happens in China over the medium term may impact the prices for electricity that consumers everywhere will have to pay,” Van der Hoeven cautioned.




Edited by: Creamer Media Reporte