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Med ium - t erm Coal Ma rk et Repo r t 201 2

Keisuke Sadam or i . Director, Energy Markets and Security.

Paris, 18 December 2012

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Busin ess as u sual

Coal demand keep growing

And so, too, coal trade

Gl oba l p r i m ary ene rgy supp l y f r om f ossi l f ue l s

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Pow er gen era t ion in no n- OECD is c ru c ial

0%

5%

10%

15%

20%

25%

30%

35%

0

100

200

300

400

500

600

700

TWh

2009 2010 Relative growth 2009/10

Absolute

growth2009/10

Total coal-based electricity production

in 2009 and 2010

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US sha le gas sw i t ches on coa l in Eur ope

Higher t r anspor t a t ion costs fo r gash inders reg iona l i n t eg ra t ion

I n Europ e , coal r eacts s t r onger t hangas to US low pr ices

0

0,5

1

1,5

2

2,5

3

3,5

0

1

2

3

4

5

6

USD/GJ Mt

US steam coal exports to Europe (right axis) Northwest Europe (ARA CIF)

Henry Hub price Coal price in Central Appalachia

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A go lden ag e o f coa l in Eur ope?

Low carbo n p r i ces: t he Eur ozone c r i s is is a surp r i se , bu t t h e renew ab le ram pup i s no t

Gas to coa l sw i t ch i s al ready l im i ted by sys tem opera t ion cons t ra ins

The need fo r conv ent ion a l genera t i on i s dec l i n ing

Decom ission ing o f o ld p lan t s i s sure , bu t econom ics o f new coa l t o bu i l d i sques t ionab le

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Mov in g East

Seaborne

imports to

the Atlantic

Basin

(218 Mt)

Seaborne

imports to

the Pacific

Basin

(573 Mt)

Seaborne

exports from

the Atlantic

Basin

(128 Mt)

Seaborne

exports from

the Pacific

Basin

(498 Mt)

Seaborne

exports from

South Africa

(71 Mt)

109 Mt 19 Mt

478 Mt20 Mt

Seaborne

exports from

Russia

(93 Mt)

59 Mt

42 Mt

34 Mt

29 Mt

Atlantic Basin Suppliers to both markets Pacific Basin

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Coal p r ices a re back in syn c

0

50

100

150

200

250

300

350

USD/t

Newcastle steam coal (FOB) Ultra-low volatile PCI coal (FOB)

Australian prime hard coking coal (FOB)

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I ndon esia -Ch ina , a good pa r t ne rsh ip

2010(133 Mt)

2009(104 Mt)

Australia Canada United States Other OECD Colombia

Indonesia South Africa Russia Vietnam Other

I ndonesia mee t s m uch ofCh in ese dem and

For Ch in ese u t i l i t ies , I ndo nes iancoa l is a good opt ion

For low cos t I ndones ianpr oducers , Ch in ese coa l t h i r s t w asgood bus iness

Steam coal imports to China

Seaborne steam coal trade

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Fro m Be ij i n g t o I n d ia ?

CountryNumber of

investments

Acquired resources/reserves

(Mt)

Capital

expenditure

(USD Million)

Australia 9 17 138 7 612

Indonesia 28 6 271 4 526

South Africa 4 377 3 300

United States 3 348 820

Total 44 24 134 16 258

Selected investments of Indian companies in coal assets

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Ch inese s low -dow n can a f f ect seabo rn ecoal t r ade

-40

-20

0

20

40

60

80

100

2017

Mtce

Australia Russia United States Other exporters China Other importers

Higherin

theBCS

LowerintheB

CS

Exporters ImportersExporters Importers

Thermal coal Metallurgical coal

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Tw o st e p s f o r w a r d

Outlook for global export capacity utilisation for seaborne hard coal until 2017

0

200

400

600

800

1000

1200

1400

1600

1800

2000

2010 2011 2013 2015 2017

Mtpa

Existing export capacity Probable expansions Potential expansions

Port capacity Exports historic Exports - BCS

Exports - CSDC

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I s s l ow - d o w n a l r ead y h a p p en i n g ?

BREAKING NEWS

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KEY MESSAGES

Coa l demand r i ses ove r t he ou t look pe r iod , app roach ing o i l

Dr iven m a in ly by pow er genera t ion in n on OECD coun t r ies

Sha le gas revo lu t ion led to d ecl ine in coa l consum pt ion in t he US, and t oincreased use o f coa l in Eur ope

The la rge gas- t o -coa l sw i tch in Eu rope i s p ro j ected t o peak in 201 3

Wh ereas Ch ina w i l l su r pass the res t o f th e w or ld i n coal consum pt ion ,I n d i a w i l l g ai n im p o r ta n ce i n co a l m a rke t , b e co m in g th e l a rg e st sea b o rn ecoa l im p o r te r

Seaborne coal t r ade w i l l con t inue to inc rease un less th e re i s a s low dow nin Ch in ese econom y

Announcem en ts o f cu ts and layo f fs , desp i te m any p ro j ec ts i n the p ipe l ine

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Th a n k y o u f o r y o u r at t en t i on