Date post: | 20-Aug-2015 |
Category: |
Technology |
Upload: | mines-and-money |
View: | 621 times |
Download: | 2 times |
Mines and Money Australia
International Coal Markets
Bernard Guarnera, ChairmanBehre Dolbear Group Inc.
andTim Alch, Vice President
Behre Dolbear & Company (USA), Inc.
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
The Current State of the International Coal Markets
• “Russia's Severstal sets sights on U.S. coal market ”Marketwatch, Sept. 29, 2011
• “India 2011/12 coal import needs may jump to 114 mln T; Demand-supply gap may touch 200 mln T by 2017-min”Reuters, Sept 27 , 2011
• “Australia cuts coal output forecasts as recovery drags –lowering forecast for the production of met coal by 6 % to 161 million tonnes” Reuters, Sept 19 , 2011
• “Coal shortage begins to bite: At the end of Aug, 2 2 power plants across India had a supply of less than 7 days of coal”Livemint, Sept 20, 2011
• “SK's Posco to form iron ore, coal joint ventures in Co lombia”Platts, 15 Sep , 2011
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Metallurgical Coal Price Trends
Source: Platts, Citi Investment Research and Analysis
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Current “Contract” Coal Prices Remain Resilient1
• Hard Coking Coal: US$320 to US$350 per T2
• Soft Coking Coal: US$240 to US$265 per T2
• Thermal Coal: US$130 to US$140 per T
(Forecasts made in December 2010 have gone bust)
1”Quarterly” Australian Benchmark2±35% to 45% increase QoQ
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
More Consumers in Asia Need More Energy and Coal Especially
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Coal Use Outside the OECD
Source: International Energy Statistics Database, UN Statistics Division
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
China and India Will Account for Bulk of Metallurgical Coal Demand
Source: BHP Billiton
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Asia Forecast to Dominate Future Energy Demand Scenarios
• Thermal and metallurgical coal demand and imports in Asia are surging to record levels
• A steady (sporadic) increase in coal prices is forecast over the next several years
• Production may struggle to meet future demand
• China, India and Korea buying coal resources
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Southeast Asian Coal Imports Are Trending Higher
Source: GTIS; Trade Data, Credit Suisse Estimates
Mill
ion
Ton
nes
6
5
4
3
2
1
0
1995 1997 1999 2001 2003 2005 2007 2009 2011
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
China
• Still moving 20 million people a year into cities (over the next 15 years)
• Average GDP growth of +/-6% per year
• A power grid the size of that in the UK each year for the next 15 years
• Largest consumer and producer of coal
• Switched from being a coal exporter to coal importer three years ago
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
China’s Mining Acquisitions By Commodity – Coal is Target #1
Source: Ernst & Young’s Global Mining & Metals Center*Includes domestic deals within sector
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
India Plans to Build Power Plants and Ports to Import More Coal
India’s Power Plant Expansion Forecasts Indian Port Expansions
Source: CEA; Credit Suisse Estimates Source: Credit Suisse Estimates
0
5
10
15
20
25
FY
-11
FY
-12
FY
-13
FY
-14
FY
-15
FY
-16
FY
-17
FY
-18
FY
-20
GW
0
50
100
150
200
250
300
350
2009
2010
F
2011
F
2012
F
2013
F
2014
F
2015
F
2016
F
2017
F
2018
F
2019
F
2020
F
mn
tonn
es
India - East India - West
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
India Will Be (Is?) The India Will Be (Is?) The WorldWorld’’s Largest Coal Importers Largest Coal Importer
India Coal
Imports
Source: Peabody
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Coal Demand Will Outpace Other Fuel Sources
Source: International Energy Agency World Energy Outlook 2009, Energy Information Administration Annual Energy Outlook and Peabody Analysis
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Major New Global-Fuel Generation Build-Out Under Way
Data and Estimates Based on Platts Worldwide Power Plant Database and Peabody Analysis
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Global Steel Production Drives Met Coal Demand in China, India, etc.
Global Met Coal Use Likely to Increase by 50%
Source: World Steel Association; Third Party Data and Peabody Analysis
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Six Largest Producing Nations 20101
(Million Tonnes) and % Change from 2009
• China 3,680; Up 9%
• USA 1,000; Up 2.1%
• India 580; Up 2.5%
• Australia 410; Up 3%
• Indonesia 350; Up 19%
• Russian Federation 300
1Approximations – Various Sources (±2% or 3%)
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Metallurgical Coal Cost Curve – Well Below Current Prices
Source: Macquarie Research, September 2010
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Thermal Coal Trade Flows 2010
Source: GTIS, Macquarie Research, September 2010
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Indonesia and Australia Forecast to Increase Coal Exports Significantly
Source: Wood McKenzie
Indonesia and Australia’s Transportation Costs: Key Suppliers to Asia
Transportation Routes
Main Demand Area
150M Tons in 2009150M Tons in 2009
130M Tons in 2009130M Tons in 2009
MalaysiaMalaysia
IndiaIndia
ChinaChina
Hong KongHong Kong
KoreaKorea JapanJapan
PhilippinesPhilippines
TaiwanTaiwan
Australia
IndonesiaIndonesia
ThailandThailand
Main Supply Areas
Origin Destination Estimated Time to Destination
(Days)
Estimated Cost per Tonne
(US$/t)
Indonesia Japan 7 - 9 8 - 10
China 8 - 10 9 - 11
Australia Japan 10 - 13 11 - 17
China 12 - 15 13 - 19
Canada(East Coast)
Japan 14 - 16 15 - 18
China 15 - 18 17 - 20
USA(West Coast)
Japan 27 - 33 16 - 20
China 29 - 35 18 - 21
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Greatest Metallurgical Coal Import Regions (Million Tonnes – 2011e)
• Japan 59
• India 49
• European Union 35
• China 35
• South Korea 25
Source: Citigroup
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Greatest Metallurgical Coal Export Regions (Million Tonnes – 2011e)
• Australia 140
• USA 53
• Canada 26
• Russia 14
• Mozambique 4
Source: Citigroup
BEHRE DOLBEARfounded 1911 MINERALS INDUSTRY ADVISORS
Conclusions and Challenges
• Outlook for Coal in Australia and Southeast Asia Robust
• Social Opposition to Mining Development
• Higher Taxes
• Increased Regulations
• Replacing Production from Existing Coal Mines
• Shortage of Skilled Laborers and Experienced (or any) Professionals
• Mine Cost Inflation