The Asia Miner

JUN 2018

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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Page 9 of 51

Futur e of coal the asia miner • volume 15 • issue 2 8 FEATURE: Future of coal As reported by Reuters, Chinese thermal coal futures had hit record 687 yuan (AU$108.49), up five-fold on their 2016 slump. Coal cargo prices from Australia's Newcastle terminal have also roughly doubled in the same period to over AU$100 per tonne, closely resembling their 2011/2012 high. In an atmosphere where the spotlight has been firmly focused on clean energy producƟon – especially LNG – and investors shunning coal due to concerns and pressure over its negaƟve environmental impact, the rise in coal prices has taken many by surprise. AMCI Group Managing Director Brian Beem affirmed that outlook for high grade thermal coal and steelmaking coal was posiƟve. "The urbanisaƟon and electrificaƟon of Asia will conƟnue to drive demand for these commodiƟes, and we see supply struggling to meet that demand because of depleƟon and lack of investment in new capacity," Beem said in emailed comments to Reuters. ENERGY HUNGRY ASIA BUOYS COAL At the epicentre of this strong resurgence is Asia's conƟnued thirst for thermal coal. In spite the rise of LNG and renewables, consumpƟon of coal across Asia has barely dropped. Thomson Reuters Eikon trade data shows that shipments to North and South Asia's main energy consumers, which make up half of the world's populaƟon, have not dropped since 2016, unlike commodiƟes such as LNG. The top coal and LNG consumer – Japan – imported a record of 114.5 million tonnes of coal in 2017, a rise of 4.3%. That same year, LNG imports rose only by 0.4% to 83.8 million tonnes. China's thirst for energy conƟnues to outpace all of its counterparts, with the country's coal imports in 2017 at record highs not seen since 2014 – a big 270.9 million tonnes. Overall, Asia's share of the global coal consumpƟon increased from less than 50% in 2000 to almost 74% in 2016. Price growth is clearly on the horizon in 2018, but some F UTURE OF COAL – TO JUMP OR NOT TO JUMP. THAT IS THE QUESTION AŌer surviving record lows in 2015/2016, the coal mining industry appears to be experiencing a renaissance in the Q1/2018, with coal miners enjoying their best returns, as strong Asian demand and Ɵght supplies are sending prices up.

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