Wyoming Infrastructure Authority Spring Energy Conference June 11-12, 2015 Cheyanne Pacific Rim Coal Marketing Michael Mewing MC2 Company Pty Limited
Pacific Rim Coal Marketing * Asia s reliance on coal * Asia Pacific Coal Trade * Indonesian subbituminous coal export industry * PRB opportunities * Demand Pull market
Asia s Reliance on Coal Japan, Korea & Taiwan have no domestic energy reserves fully reliant upon imports Asia has limited access to natural gas Asian electricity grids are independent Importance of security of supply Coal and nuclear - base load for power generation Coal represents 52% of Asia s primary energy World s average 30%
Primary energy world consumption 2013 Million tonnes oil equivalent BP Statistical Review of World Energy 2014 BP 2014
Primary energy regional consumption pattern 2013 Percentage BP Statistical Review of World Energy 2014 BP 2014
Energy Consumption by Fuel Type 2013 (percentage) TOTAL (Mtoe) Coal (%) Oil (%) Natural Gas (%) Nuclear (%) Hydro (%) Renewable (%) North America 2,786.7 17.5 36.7 30.1 7.7 5.6 2.3 Europe & Eurasia 2,925.3 17.4 30.0 32.8 9.0 6.9 3.9 Asia Pacific 5,151.5 52.5 27.5 11.2 1.5 6.0 1.5 WORLD 12,730 30.1 32.9 23.7 4.4 6.7 2.2 USA 2,265.8 20.1 36.7 29.6 8.3 2.7 2.6 China 2,852.4 67.5 17.8 5.1 0.9 7.2 1.5 India 595.0 54.5 29.4 7.8 1.3 5.0 2.0 Japan 474.0 27.1 44.1 22.2 0.7 3.9 2.0 South Korea 271.3 30.2 40.0 17.4 11.6 0.4 0.4 Taiwan 110.9 36.9 39.1 13.3 8.5 1.1 1.1 6 Source: BP Statistical Review of World Energy 2014
Asia Pacific Coal Trade Asia - @ 70% of the world s coal production & trade Newcastle bituminous coal historically design spec for Asian power stations (imported coal) Australian and Indonesian coal industries have been developed for the export market Asian thermal coal imports have increased @ 400 million tons over past 6 years (total 900Mtpa) US thermal coals hold a 1% market share in Asia Dominance of China = instability
Coal production/consumption by region 2013 Million tonnes oil equivalent Production by region Consumption by region BP Statistical Review of World Energy 2014 BP 2014
Americas, RSA & Asia Pacific Coal Production 1990-2013 (million tonnes per annum) Source: BP Statistical Review of World Energy 2014 4000 3500 3000 2500 2000 1500 1990 2000 2003 2008 2012 2013 1000 500 0 USA Canada Colombia RSA Australia China India Indonesia
Regional Coal Production 1990-2013 (million tonnes) Region 1990 2000 2003 2008 2012 2013 2013 Mkt Share Var 2000-2013 Americas 1,039 1,108 1,106 1,231 1,105 1,079 13.6% (29) Europe & Euroasia 1,890 1,173 1,198 1,254 1,282 1,222 15.5% 49 Asia Pacific 1,628 2,188 2,764 4,087 5,243 5,336 68.9% 3,148 South Africa 175 224 238 253 258 257 3.3% 33 OECD 2,286 2,028 2,045 2,169 2,056 2,020 25.6% (8) NON OECD 2,454 2,673 3,267 4,659 5,837 5,877 74.4% 3,204 TOTAL WORLD 4,740 4,701 5,312 6,828 7,893 7,896 100.0% 3,195 Source: BP Statistical review of World Energy 2014 10
WORLD Top Ten Thermal Coal Producers (2013e) Top Ten Coal Producers (million metric tonnes) 5,800 Top Ten Coking Coal Producers (2013e) WORLD 1,200 PR China 3,034 USA 756 India 526 Indonesia 486 South Africa 255 Russia 201 Australia 239 Kazakhstan 103 Colombia 81 Poland 65 PR China 527 Australia 158 USA 78 Russia 73 India 42 Canada 34 Mongolia 20 Ukraine 20 Kazakhstan 12 Poland 12 11 Source: World Coal Association - Coal Facts 2014 Lignite production 800 million tonnes
Americas, RSA & Asia Pacific Production 1990-2013 (million tonnes) 1990 2000 2003 2008 2012 2013 2013 Mkt Share Var 2000-2013 USA 934 974 972 1,063 922 893 11.3% (81) Canada 68 69 63 68 67 70 0.9% 1 Colombia 21 38 50 74 89 86 1.1% 48 Americas 1.039 1,108 1,106 1,231 1,105 1,077 13.6% (31) South Africa 175 224 238 253 258 257 3.3% 33 Australia 210 312 350 409 453 478 6.1% 166 China 1,080 1,384 1,835 2,802 3,645 3,680 46.6% 2,296 India 223 335 375 516 607 605 7.7% 270 Indonesia 11 77 114 240 386 421 5.3% 344 Total Asia Pacific 1,628 2,188 2,764 4,087 5,243 5,336 67.6% 3,148 12 Source: BP Statistical Review of World Energy 2014
Coal Imports by Country/Region 1990-2012 (million short tons) Country/Region 1990 1995 2000 2005 2010 2013 Var 2000-2013 China 2 2 2 29 180 319 317 Japan 116 137 169 199 194 203 34 India 6 15 26 45 90 97 71 South Korea 27 51 68 82 126 136 68 Taiwan 20 32 50 67 70 72 22 Asia & Oceania 192 259 341 469 747 906 565 TOTAL WORLD 463 577 719 916 1,161 1,343 624 Source: US Energy Information Administration Agency (EIA) 13
Indonesian Subbituminous Coal Export Industry Indonesia s subbituminous coal exports: 2000 12 million tonnes 2013 +300 million tonnes Indonesia largest thermal coal exporter - 35% of Asian market A grade subbituminous coals secured market position through quality and cost competitiveness Industry has flexibility to respond to market small equipment, flexible labor force, cost effective logistics Challenges: Quality Expiry of CCOW s Market s desire for diversity Government intervention
Coal Exports by Country 1990-2012 (million short tons) Country/Region 1990 1995 2000 2005 2010 2013 Var 2000-2013 China 20 41 77 93 27 15 (62) Australia 115 151 206 256 323 332 126 Indonesia 5 35 63 142 295 422 359 USA 106 90 60 52 83 127 67 South Africa 55 66 77 79 57 82 5 Columbia 16 21 39 59 77 92 53 TOTAL WORLD 468 584 723 935 1,212 1,414 691 Source: US Energy Information Administration Agency (EIA) 15
Coalfields of Indonesia June 19, 2015 16
Export Coal Qualities Australian bituminous & Indonesian subbituminous Brand Hunter Valley Ensham Adaro Mulia Energy: - NAR kcal/kg - Btu/lb 6,080 11,350 6,005 11,250 4,740 9,000 3,950 7,560 Total Moisture % (ARB) 9.0 11.5 25.0 35.0 Volatile Matter % (ADB) 33.5 26.5 43.5 38.0 Ash % (ADB) 13.5 12.0 2.0 3.9 Total Sulphur % (ADB) 0.56 0.70 0.15 0.15 HGI 50 58 53 70 Topsize (mm) 50 50 50 50 IDT (degrees Celsius) 1,450 1,350 1,200 1,180 Sodium in ash % (Dry Basis) 0.50 0.70 0.20 6.5 17
PRB Coal Opportunities Market diversity FOR costs Quality: - Indonesian B grade coals - new boilers designed for subbituminous coals Logistics challenge rail & port Professionalism of US producers Ocean Freight Indonesian coal industry Australian coal industry Cost pressures Infrastructure costs
SAILING TIMES TO MAJOR ASIAN MARKETS US WEST COAST, INDONESIA & AUSTRALIA
Coalfields of Australia June 19, 2015 20
Demand Pull Market Coal will continue to be base load in Asia limited alternatives 5 year demand growth: +700 million tonnes pa 2035 demand growth: 1 billion tonnes Growth not just in China China s dominance = instability Asian demand will be met regardless of the level of participation by US coals
International Energy Agency Medium Term Market Report 2014-2019 2.1% per annum projected growth 2014-2019 versus 3.3% per annum in 2010-2013 and 4.6% per annum over past 10 years 722 million tonnes per annum incremental coal demand increase by 2019 China India ASEAN OECD Asia Other Developing Asia Africa/Middle East OECD Americas +471 Mtpa +177 Mtpa + 79 Mtpa + 19 Mtpa + 21 Mtpa + 38 Mtpa - 54 Mtpa China.. will remain the elephant in the room for a while. There can also be upturn surprises: the Galilee and Surat Basins in Australia and PRB in United States have the potential to oversupply any demand if the appropriate infrastructure is in place.
Mt Imported Thermal Coal Demand by Basin 2008-2035 (million tonnes) 2,500 2,000 Thermal import coal demand by basin (Mt) 1,500 1,000 500 0 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 Atlantic Pacific Source: Wood Mackenzie Coal Market Service
Japan & Korea 5 Year Plans - Coal Fired Power Stations JAPAN Generating Capacity (MW) Coal Demand (Mtpa) 2014 Existing capacity 35,843 85.5 2015-2020 New construction 7,057 15.5 Year 2020 42,900 101.0 SOUTH KOREA 2014 Existing capacity 27,469 91.3 2015-2020 New construction 18,100 63.5 Year 2020 45,569 154.8
There are 1.3 billion people in the world today who live without access to electricity. A life lived without access to modern energy is a life lived in poverty. The International Energy Agency (IEA) has predicted that more than half of the on-grid electricity needed to meet their energy for all scenario would need to come from coal World Coal Association, Divestment & future role of coal, November 2014 25