TABLE OF CONTENTS 6 MEDIUM-TERM COAL MARKET REPORT 2012

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1 TABLE OF CONTENTS FOREWORD... 3 ACKNOWLEDGEMENTS... 5 EXECUTIVE SUMMARY Business as usual The winds of change US shale gas switches on coal in Europe From Beijing to New Delhi? Only China can stop the traffic Two steps forward, one step back RECENT TRENDS IN DEMAND AND SUPPLY Summary Demand OECD demand trends Demand trends in non-oecd countries Supply OECD supply trends Regional focus: United States Non-OECD supply trends References RECENT DEVELOPMENTS IN INTERNATIONAL TRADE Summary International coal trade The seaborne hard coal market Coal trading Derivatives Prices Seaborne thermal coal prices Seaborne metallurgical coal prices Coal forward curves Mergers and acquisitions Dry bulk shipping market Cost developments Regional analysis Exporters Importers References MEDIUM-TERM COAL MARKET REPORT 2012

2 MEDIUM-TERM PROJECTIONS OF DEMAND AND SUPPLY Summary Introduction Projection of global coal demand in the BCS OECD coal demand projection Regional focus: United States Non-OECD economies coal demand projection The CSDC The possibility of a slow-down of the Chinese economy Projection of Chinese coal demand in the CSDC Global supply projections in the BCS OECD coal supply Non-OECD coal supply References MEDIUM-TERM PROJECTIONS OF SEABORNE COAL TRADE Summary The BCS Seaborne steam coal trade projection Seaborne metallurgical coal trade projection The CSDC Seaborne thermal coal trade projection Seaborne metallurgical coal trade projection References EXPORT CAPACITY INVESTMENT OUTLOOK Summary Utilisation of mine and port export capacity Utilisation of export mine capacity Utilisation of port capacity Export capacity investments Investment in mining capacity Investment in infrastructure capacity Regional analysis Australia Colombia South Africa Russia Indonesia Mozambique Canada Others MEDIUM-TERM COAL MARKET REPORT

3 Projected utilisation of export capacity Assumptions and methodology Global analysis Regional analysis References SPECIAL FOCUS: CHINA Non-power coal consumption in China Iron and steel industry Chemicals Non-metallic minerals Paper Coal transport Major coal transport corridors Outlook References Tables Regional and country groupings LIST OF FIGURES Figure 1 Coal-based gross electricity generation in select OECD countries, Figure 2 Coal-to-gas ratio in total power production in the United Kingdom, Figure 3 Monthly crude steel production in OECD countries, Figure 4 Evolution of coal-based electricity generation in non-oecd countries Figure 5 Evolution of global cement production over the last decade Figure 6 Indicative mine-mouth cash cost curve for thermal coal in the United States, Figure 7 Development of the seaborne hard coal market, Figure 8 Trade flows in the seaborne steam coal market, Figure 9 Trade flows in the seaborne metallurgical coal market, Figure 10 Development of trade volumes for coal derivatives, Figure 11 Development of coal marker prices for different types of coal, Figure 12 The impact of the US shale gas revolution on European coal prices Figure 13 Development of price difference between Europe and China Figure 14 High coal prices in Asia increasingly attract South African steam coal Figure 15 Development of off-spec coal prices (FOB), Figure 16 Development of metallurgical coal prices and Chinese crude steel production, Figure 17 Forward curves of API2 and API4, Figure 18 Development of the bulk carrier fleet (only units over dwt) Figure 19 Development of select freight rates, Figure 20 Indexed price development of select commodities used in coal mining Figure 21 Indexed development of the US dollar against select currencies Figure 22 Indexed labour cost development (in local currency) in select countries Figure 23 Productivity in select countries and regions MEDIUM-TERM COAL MARKET REPORT 2012

4 Figure 24 Indicative steam coal supply costs to Northwest Europe by supply chain component and by country in USD/t, 2009 and Figure 25 Indicative coking coal supply costs to Japan by supply chain component and country in USD/t, 2009 and Figure 26 Development of Indonesian exports compared with the rest of the world and the global seaborne steam coal trade, Figure 27 US quarterly coal exports and imports, Figure 28 Regional power demand, production and hydro generation in China Figure 29 Structure of Chinese steam coal imports, 2009/ Figure 30 Regional (real) steam coal price assumptions, in USD (2011)/gigajoule (GJ), delivered to the power plant Figure 31 Global and Chinese coal demand in the BCS and the CSDC Figure 32 Projection of coal demand in non-power sectors for OECD economies Figure 33 Projection of coal demand in the power sector for OECD economies Figure 34 Contracted quantity, lifetime and origin of coal supply contracts to power plants in the United States as of Figure 35 Projection of coal demand in non-power sectors in non-oecd economies Figure 36 Projection of coal demand in the power sector among non-oecd economies Figure 37 Trends in coal-based CO 2 emission intensities for the top four emitting countries/regions.. 80 Figure 38 Comparison of the share of investments in GDP for select countries Figure 39 Development of Chinese fixed-assets investment, Figure 40 Development of Chinese electricity generation, Figure 41 Projection of Chinese coal demand in the BCS and the CSDC Figure 42 Global coal supply projection in the BCS Figure 43 Coal supply projection for OECD member countries in the BCS Figure 44 Projection of coal supply for non-oecd economies in the BCS Figure 45 Development of international seaborne hard coal trade in the BCS and CSDC Figure 46 Seaborne thermal coal imports in the BCS Figure 47 Seaborne thermal coal exports in the BCS Figure 48 Seaborne metallurgical coal imports in the BCS Figure 49 Seaborne metallurgical coal exports in the BCS Figure 50 Differences in seaborne thermal coal trade between the BCS and CSDC Figure 51 Differences in seaborne metallurgical coal trade between the BCS and CSDC Figure 52 Port capacity, mining capacity, exports and utilisation, Figure 53 Cumulative probable expansion of hard coal export mining capacity Figure 54 Cumulative probable and potential expansion of hard coal export mining capacity Figure 55 Projected cumulative additions to coal terminal capacity Figure 56 Outlook for global export capacity utilisation for seaborne hard coal until Figure 57 Outlook for Australian export capacity utilisation for seaborne hard coal until Figure 58 Outlook for Colombian export capacity utilisation for seaborne hard coal until Figure 59 Outlook for Russian export capacity utilisation for seaborne hard coal until Figure 60 Outlook for South African export capacity utilisation for seaborne hard coal until Figure 61 Final coal consumption by industries, Figure 62 Total cargo tonnage by rail and coal transported by rail in China MEDIUM-TERM COAL MARKET REPORT

5 LIST OF MAPS Map 1 Regional consumption and production of coal in the United States in Map 2 Coal exporting and importing regions in China, Map 3 Inter-regional coal flow in 2015 according to the 12 th FYP for the coal industry LIST OF TABLES Table 1 Coal demand overview Table 2 Major hard coal and brown coal consumers among OECD countries Table 3 Gas- and coal-based electricity generation in select European countries Table 4 Coal supply overview Table 5 Major hard coal and brown coal producers among OECD countries Table 6 Mining methods, production shares and number of mines in the United States Table 7 Typical haulage distances by transportation mode in the United States Table 8 Major hard coal and brown coal producers among non-oecd countries Table 9 Some key mergers and acquisitions in the global coal industry, Table 10 Australian port capacity available for coal exports (end of 2011) Table 11 US port capacity available for coal exports in the East Coast and Gulf Coast, Table 12 Breakdown of important input factors for an average coal mine in Poland, Table 13 Select foreign direct investments into the coal supply chain by Indian investors Table 14 Projection of global (hard and brown) coal demand until 2017, BCS, in Mtce Table 15 Development of select indicators for the Chinese iron and steel industry Table 16 Restructuring of Shanxi s coking industry in the 11 th and 12 th FYPs Table 17 Major CTL projects in China Table 18 Indicators of the building materials sector in the 12 th FYP Table 19 Overview of the 12 th FYP for the cement industry Table 20 Overview of the 12 th FYP for the pulp and paper industry Table 21 Development of transport volumes on the three coal transport routes in the west-to-east corridor, , in Mt Table 22 Development of coal throughput at N7 ports, Table 23 Coal demand, , Base Case Scenario (BCS), in Mtce Table 24 Coal demand, , Chinese Slow-Down Case (CSDC), in Mtce Table 25 Coal production, , BCS, in Mtce Table 26 Coal production, , CSDC, in Mtce Table 27 Hard coal net imports, , BCS, in Mtce Table 28 Hard coal net imports, , CSDC, in Mtce Table 29 Seaborne steam coal imports, , BCS, in Mtce Table 30 Seaborne steam coal imports, , CSDC, in Mtce Table 31 Seaborne steam coal exports, , BCS, in Mtce Table 32 Seaborne steam coal exports, , CSDC, in Mtce Table 33 Seaborne metallurgical coal imports, , BCS, in Mtce Table 34 Seaborne metallurgical coal imports, , CSDC, in Mtce Table 35 Seaborne metallurgical coal exports, , BCS, in Mtce Table 36 Seaborne metallurgical coal exports, , CSDC, in Mtce MEDIUM-TERM COAL MARKET REPORT 2012

6 LIST OF BOXES Box 1 Tips for readers Box 2 A golden age of coal in Europe? Box 3 Can open pit coal mines be environmentally friendly? Box 4 Metallurgical coal trade: from demand side market power to supply side market power Box 5 Butterfly effect? How rainfall in Central China drives coal prices in Rotterdam Box 6 Biomass co-firing in coal-fired plants Box 7 An outlook on the development of coal-based carbon emissions in select countries Box 8 Wyoming s coal to China? Box 9 Mozambique s Tete coal fields: the next big thing? Box 10 Coal industry consolidation in Shanxi province Box 11 Beijing switches from coal to gas to go green MEDIUM-TERM COAL MARKET REPORT