The China Factor: Robust demand for thermal coal

In North America many thought that thermal coal was a thing of the past and we won’t need it anymore to heat our houses or to generate electricity. But they were all proved wrong. The coal market is healthier than ever because of the strong demand generated by developing nations and it will continue to be that way for decades to come.

Thermal coal represents 86% of the world’s total coal production and generates 41% of the world’s power. And here’s the catch: 3.6 billion people have no or only partial access to electricity – that’s over half of the total world’s population.

I might add that they won’t have access to electricity unless they have the means to pay for it, which means jobs, but businesses also need electricity in order to exist. So one thing leads to another and the demand for electricity will rise exponentially in the near future as industrialization and urbanization are irreversible trends.

Asia matters: some 60% of the world’s population lives there (during the 20^th century its population quadrupled).

The China factor: China has 950,000 MW installed capacity and it is growing at 10% per year (80% is generated from coal). It needs to double its capacity to 1.885 billion KW by 2020. By comparison Canada has only 110,000 MW installed capacity.

If we look at projected GDP increase through 2030 we see China with 380%, India 290% and USA at 95%.

In sum: developing Asian countries will represent 90% of the long-term global coal demand.

One of the speakers at Roundup, Gene Wusaty, managing director of Coalspur Mines Ltd., said the increase in the price of thermal coal from $30/tonne to $135/tonne happened because of catastrophic events (i.e. flooding in Australia) and indicated that the coal market is tight.

Coalspur is developing a thermal coal project in Alberta, Canada.