Thursday, July 2, 2009

Is a Coal Production Boom Imminent?

From the NYT's Green Inc. blog:

Though the price of coal has plummeted in the downturn and it is expected to remain weak in the near-term, coal markets “are ultimately likely to rebound with a roar,” Rick Navarre, the president of Peabody Energy, one of the world’s largest coal companies, was quoted by Reuters as saying last week.

His optimism may be well founded. Coal use tends to decline in a recession along with weaker demand for electricity and steel, which are industries that rely on the fossil fuel. But a number of reports this week suggest that the industry is already girding for a future boom.

According to a report by Bloomberg this week, Macarthur Coal, an Australian company that is the world’s biggest exporter of pulverized coal, plans to double production over the next five years.

The report also suggested that Australia’s Dalrymple Bay port, the world’s third-largest coal export terminal, may increase its cargo-handling capacity as producers of the fuel boost output. Macarthur is a big user of the Dalrymple terminal.

Meanwhile, demand is also set to soar in California, according to a new study released Tuesday by the advocacy group Environment California and reported by The Los Angeles Times.

Mr. Navarre said Peabody Energy, which operates mines in the United States and Australia and exports much of its coal to Asia, was expecting China and India to account for half of the growth in global coal demand over the next five years, according to the report....MORE