The Medium-term Coal Market Report from the International Energy Agency makes for sobering -- if not surprising -- reading for anyone concerned about greenhouse-driven climate change. Presentation made in Paris, Dec. 18, 2012, by Keisuke Sadamori. Director, Energy Markets and Security. More on coal at Dot Earth: http://bit.ly/dotCoal More from IEA: http://www.iea.org/newsroomandevents/pressreleases/2012/december/name,34441,en.html

1. Medium-term Coal Market Report 2012
Keisuke Sadamori. Director, Energy Markets and Security.
Paris, 18 December 2012
© OECD/IEA 2012

2. Business as usual
Global primary energy supply from fossil fuels
 Coal demand keep growing
 And so, too, coal trade
© OECD/IEA 2012

3. China is coal. Coal is China
Fossil fuel demand in major consuming regions
* The increase in US oil demand in 2012 is caused by differing definitions. While historic data for US oil
demand are based on IEA’s Oil Information, projections of US demand refer to US50 oil demand as
defined in Table 2 of IEA’s Medium-Term Oil Market Report 2012.
© OECD/IEA 2012

4. Power generation in non-OECD is crucial
Absolute
Total coal-based electricity production growth
in 2009 and 2010 2009/10
TWh
700 35%
600 30%
500 25%
400 20%
300 15%
200 10%
100 5%
0 0%
2009 2010 Relative growth 2009/10
© OECD/IEA 2012

5. US shale gas switches on coal in Europe
USD/GJ Mt
6 3,5
5 3
2,5
4
2
3
1,5
2
1
1 0,5
0 0
US steam coal exports to Europe (right axis) Northwest Europe (ARA CIF)
Henry Hub price Coal price in Central Appalachia
 Higher transportation costs for gas
hinders regional integration
 In Europe, coal reacts stronger than
gas to US low prices
© OECD/IEA 2012

6. A golden age of coal in Europe?
 Low carbon prices: the Eurozone crisis is a surprise, but the renewable ramp
up is not
 Gas to coal switch is already limited by system operation constrains
 The need for conventional generation is declining
 Decomissioning of old plants is sure, but economics of new coal to build is
questionable
© OECD/IEA 2012

7. Moving East
Seaborne
59 Mt exports from
Russia
34 Mt
(93 Mt)
109 Mt 19 Mt
Seaborne Seaborne Seaborne Seaborne
imports to exports from exports from imports to
the Atlantic the Atlantic the Pacific the Pacific
Basin Basin Basin Basin
(218 Mt) (128 Mt) (498 Mt) (573 Mt)
20 Mt 478 Mt
Seaborne
29 Mt exports from 42 Mt
South Africa
(71 Mt)
Atlantic Basin Suppliers to both markets Pacific Basin
© OECD/IEA 2012

8. Coal prices are back in sync
USD/t
350
300
250
200
150
100
50
0
Newcastle steam coal (FOB) Ultra-low volatile PCI coal (FOB)
Australian prime hard coking coal (FOB)
© OECD/IEA 2012

9. Indonesia-China, a good partnership
Seaborne steam coal trade
Steam coal imports to China
2009 2010
 Indonesia meets much of
(104 Mt) (133 Mt)
Chinese demand
 For Chinese utilities, Indonesian
coal is a good option
 For low cost Indonesian
Australia Canada United States Other OECD Colombia producers, Chinese coal thirst was
Indonesia South Af rica Russia Vietnam Other good business
© OECD/IEA 2012

10. From Beijing to India?
Selected investments of Indian companies in coal assets
Capital
Number of Acquired resources/reserves
Country expenditure
investments (Mt)
(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
© OECD/IEA 2012

11. Chinese slow-down can affect seaborne
coal trade
Thermal coal Metallurgical coal
Exporters Importers Exporters Importers
Mtce
100
80
Higher in the BCS
60
40
20
0
Lower in the BCS
-20
-40
2017
Australia Russia United States Other exporters China Other importers
© OECD/IEA 2012

12. Two steps forward
Outlook for global export capacity utilisation for seaborne hard coal until 2017
Mtpa
2 000
1 800
1 600
1 400
1 200
1 000
800
600
400
200
0
2010 2011 2013 2015 2017
Existing export capacity Probable expansions Potential expansions
Port capacity Exports historic Exports - BCS
Exports - CSDC
© OECD/IEA 2012

13. Is slow-down already happening?
BREAKING NEWS
© OECD/IEA 2012

14. KEY MESSAGES
 Coal demand rises over the outlook period, approaching oil
 Driven mainly by power generation in non OECD countries
 Shale gas revolution led to decline in coal consumption in the US, and to
increased use of coal in Europe
 The large gas-to-coal switch in Europe is projected to peak in 2013
 Whereas China will surpass the rest of the world in coal consumption,
India will gain importance in coal market, becoming the largest seaborne
coal importer
 Seaborne coal trade will continue to increase unless there is a slowdown
in Chinese economy
Announcements of cuts and layoffs, despite many projects in the pipeline
© OECD/IEA 2012

15. Thank you for your attention
© OECD/IEA 2012