International Coal Markets www.coalimp.org.uk Nigel Yaxley Managing Director, CoalImp 26 th November 28 International Coal Markets World supply and demand Seaborne trade Reserves and resources International prices World Energy Outlook UK coal supplies Slide 2 1
www.coalimp.org.uk World Supply and Demand Coal the world s fastest growing fuel 45. 4. Million Tonnes Oil Equivalent 35. 3. 25. 2. 15. 1. 5.. 1965 1967 1969 1971 1973 1975 1977 Source: BP Statistical Review 28 1979 1981 1983 1985 1987 Oil Coal Gas Nuclear Hydro Slide 4 1989 1991 1993 1995 1997 1999 21 23 25 27 2
China already dominates world demand 2 Million Tonne s Coal Equivalent 18 16 14 12 1 8 6 4 2 World Coal Consumption 27 (including lignite) China EU25 Source: IEA Coal Information 28 India Slide 5 Japan South Africa and most of the world s coal is produced at home 3 Million Tonnes 25 2 15 1 Global Hard Coal Production in 27 5 China India Australia South A frica Source: IEA Coal Information 28 Slide 6 Indonesia Poland Kazakhstan Colombia Ukraine Seaborne Trade 3
China also drives hard coal production growth 6 Million To nnes 5 4 3 2 1 Ukraine Colombia Kazakhstan Poland Indonesia South Africa Australia India United States PR of China 23 24 25 26 27 Source: IEA Coal Information 28 Slide 7 but second tier producers also show interesting trends 5 45 4 Million Tonnes 35 3 25 2 15 India Australia South Africa Indonesia Poland Kazakhstan Colombia 1 5 23 24 25 26 27 Source: IEA Coal Information 28 Slide 8 4
www.coalimp.org.uk Seaborne Trade World seaborne hard coal trade continues to grow 9. 8. 7. 24.6 226.7 Million Tonnes 6. 5. 4. 19.8 191.6 29.2 Coking Coal Steam Coal 3. 2. 448.9 473.6 51.1 571.1 67. 1.. 23 24 25 26 27 Source: IEA Coal Information 28 Slide 1 5
Hard coal trade patterns (IEA 25) (million tonnes) Slide 11 Major coal importers in 27 top 5 account for 5% Million Tonnes 271.9 Japan 182.3 Spain 24.4 Italy 25. 32.9 Germany 46.3 China 47.6 UK 5.3 India 54.1 Taiwan 68.9 Korea 88.3 Source: IEA Coal Information 28 Slide 12 6
Major coal exporters in 27 top 2 account for almost 5% Million Tonnes China 53.7 Canada 3.4 53.4 99.9 Australia 243.6 South Africa 66.7 Colombia 67.2 1.2 Indonesia 22.2 Source: IEA Coal Information 28 Slide 13 www.coalimp.org.uk Reserves and Resources 7
Reserves of coal are evenly distributed around the globe N. America 122/1/7 Global Energy Reserves 27 FSU 17/17/48 Asia Pacific 137/5/13 Europe 18/2/5 Middle East /13/66 S. & Cent. America 8/16/7 Africa 34/16/13 Source: BP Statistical Review of World Energy 28 Slide 15 coal / oil / gas (billion tonnes oil equivalent) The top five countries have 8% of proven reserves 25 Billion Tonnes 2 15 1 5 PR China Source: BGR - Bundesanstalt fürgeowissenschaften und Rohstoffe Slide 16 India South Africa Aust ralia Ukraine Poland Brazil Kazakhstan Canada U nited Kingdom 8
whereas China and have almost 8% of resources Trillion Tonnes 4.5 4 3.5 3 2.5 2 1.5 1.5 PR China Source: BGR Reserves India South Africa Australia Resources Slide 17 Ukraine Poland Brazil Kazakhstan Canada U nited Kingdom www.coalimp.org.uk International Prices 9
Steam coal prices delivered to North-West Europe where next? 25 5. 4.5 2 4. 3.5 15 3. $/tonne 1 2.5 2. /GJ 5 Jan 7 Feb 7 Source - MCIS Mar 7 Apr 7 May 7 Jun 7 Jul 7 Aug 7 Sep 7 Oct 7 No v 7 Dec 7 $/tonne Slide 19 Jan 8 Feb 8 /GJ Mar 8 Apr 8 May 8 Jun 8 Jul 8 Aug 8 Sep 8 Oct 8 No v 8 1.5 1..5. Coal prices are still high by historic standards 25 $/to nne 2 15 1 International coal prices delivered to North West Europe 5 1991 Source - MCIS 1992 1993 1994 19 95 19 96 1997 1998 1999 Slide 2 2 21 22 2 3 24 25 26 2 7 28 1
and remain well above cash costs of production Slide 21 Freight from Richards Bay to Rotterdam has crashed 7 6 5 $/Tonne 4 3 2 1 Jan 7 F eb 7 Mar 7 Apr 7 May7 Jun 7 Jul 7 Aug 7 Sep 7 Oct 7 Nov 7 Dec 7 Jan8 F eb 8 Mar 8 Apr 8 May8 Freight Richards Bay - ARA Jun8 Jul 8 Aug 8 Sep 8 Oct 8 N ov 8 Source - MCIS Slide 22 11
www.coalimp.org.uk World Energy Outlook IEA projects world coal demand increasing by 61% to 23 (in reference scenario) 8 Million Tonnes Coal Equivalent 7 6 5 4 3 2 1 + 61% on 25 27% Demand Reduction 51% Demand Reduction Reference Scenario '55' Scenario '45' Scenario 2 26 215 23 Source: IEA World Energy Outlook 28 Slide 24 12
Coal Trade in Reference Scenario 23 (million tonnes) HARD COAL TRADE IN REFERENCE SCENARIO, 23 (million tonnes) 3 May7 6 3e 37e RUSSIA 33 18e KEY: EXPORTS (e.g. 1 Mt) 2 e TO ASIA PACIFIC MARKET 3e MEXICO 1 59 CANADA 23 4e 112 OLAM 22 13e BRAZIL 22 ATLANTIC MARKET 9e NAFR 12 OECDEUR /EU27 311 SAFR 3 17 ME 28 ETnonEU +ATE 39 8e 3 3 INDIA 84 CHINA 39 ODA 199 KOREA 127 9 5 3 INDONESIA 11e JAPAN 162 ASIA PACIFIC MAR KET 3 2 e 1 IMPORTSinto REGION or COUNTRY (e.g. 1 Mt) 5 4 7e 7 8e AUNZ 1 REGION 1 Source: World Energy Outlook 26, IEA Notes: e after tonnage means an estimated split between Atlantic and Pac ific markets Source: IEA Slide 25 www.coalimp.org.uk UK Coal Supplies 13
Coal provided 36% of UK power in 27 Nuclear 16% Oil 1% 6% Coal 36% Gas 41% Source - BERR Slide 27 with imports providing almost three quarters of total supply Colombia 3.9 2.5 Canada 1.7 Indonesia 1.5.7 UK 17. Million Tonnes Australia 4.7 South Africa 7.7 2.3 Source BERR/HMRC Slide 28 14
How we got here UK steam coal supply and demand Million Tonnes 1 9 8 7 6 5 4 3 2 1 199 1991 Source - BERR 1992 1993 1994 1995 1996 1997 Steam Coal Demand Slide 29 1998 1999 2 21 22 UK Production 23 24 25 26 27 Contrasting supplies in 27 for steam coal and coking markets Coking Coal (7.9 Mt) Steam Coal (35. Mt) Canada Australia NB Pie charts to scale by area South Africa Colombia Indonesia Source -HMRC Slide 3 15
The mix of UK steam coal imports has changed dramatically 2,5, 2,, Monthly Tonnage 1,5, 1,, Colombia Indonesia South Africa 5, Jan-5 Source - MCIS Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 Oct-6 Slide 31 Jan-7 Apr- 7 Jul-7 Oct-7 Jan- 8 Apr- 8 Jul- 8 Steam coal imports in 27 used a wide range of ports Clydep ort Liverpool Leith Rosyth Grangemouth Blyth Tyne Tees Hull Immingham NB Arrows to Scale Newport London Medway Avonmouth Source EWS Energy/HMRC Minerals Engineering ATH Society Seminar Nottingham 26 th November 3 October 28 28 Slide 32 16
Summary Coal is the worlds fastest growing fuel China is the major driver Seaborne trade is largely dependent on second tier producers and consumers Coal reserves are abundant and distributed around the globe But, China and have the lion s share Coal prices have shown massive volatility in 28 But are still high by historic standards UK is a minor player on the world coal stage But remains the world s fifth largest importer Slide 33 www.coalimp.org.uk Thank You nigelyaxley@coalimp.org.uk 17