World Mineral Production - NERC Open Research Archive - Natural ...

Colombia showing the largest increase of 66 per cent from 39
to 66 million tonnes. Australian production (the fourth largest
producer) increased by 13 per cent.
Prices
The pricing of coal is complex, based on coal type, net
calorific value and content of impurities such as sulphur.
Additionally, the cost of transportation comprises a large
proportion of the delivered price of coal. Coal is chiefly sold
under long-term contracts that ‘fix’ the price of coal over the
term of the contract, usually with an escalator based on
inflation. Prices are normally quoted on a well-established
world spot market.
A range of prices for different coal types and markets is given
in the BP Statistical Review of World Energy 2007. For 2006,
the Northwest Europe marker price, the US Central
Appalachian coal spot price index and Japan steam coal import
cif price are all around US$63 per tonne, while the Japan
coking coal import cif price was US$93.46. Figure 1 shows
their variation over time.
Some organisations, such as the globalCOAL RB Index, base
their price on a basket of different coal-type prices and
incorporate an element of bid/offer data. The fob price of
steam coal in international trade, in terms of globalCOAL’s
Richards Bay (RB) Monthly Index, increased from
US$29.36/tonne in January 2002 to US$94.46 in December
2007, with a particularly rapid increase of 50 per cent between
September and December. The price increases in 2007 are
attributed mainly to the surge in demand from Asia and high
freight rates.
Industry events in 2007
There is a drive within government to close down dangerous
and inefficient small coal mines in China. Reports of the
numbers closed in 2007 vary, but are in the thousands. New
pricing mechanisms are being introduced to enable producers
to introduce new technology and to force small mines out of
business. Latest coal industry policy states that new mines
with an annual production capacity of less than 300 000 tonnes
18
US$/ tonne
100
90
80
70
60
50
40
30
20
10
0
1991
1992
1993
1994
1995
1996
Coal Price Trends
1997
1998
1999
Coal Marker Price (Northw est Europe) US Central Appalachian coal spot price index
Japan coking coal import price (cif) Japan steam coal import price (cif)
Source: BP Statistical Review of World Energy 2007.
2000
2001
2002
2003
2004
2005
2006
will not be approved while, in mining provinces, new mines
must have a minimum annual production capacity of 1.2
million tonnes (Mineweb, 3 January 2007). Coal companies
are also being encouraged to invest in foreign coal resources.
The United Nations Development Programme commenced a
US$14.4 million project entitled Strengthening coal mine
safety standards in China to include comparative studies on
legislation and inspection relating to coal mine safety;
improvement of standards relating to technical aspects, coal
mine design, and appropriate economic and financial policies;
development of systems for township and village mines
(where the fatality rate is almost twice the national average);
adoption of advanced gas control technology and equipment;
and safety education in township and village mines.
Shenhua Energy Co., China’s largest coal producer,
commenced trading on the Shanghai Stock Exchange in
October 2007 and nearly doubled its opening share price,
raising a record US$8.9 billion.
China, although the world’s largest producer of coal, is now a
net importer.
Australian producers experienced problems due to congestion
at ports and railways in Queensland and New South Wales
with large numbers of ships queuing to be loaded. The demand
for coal exports exceeded port capacity and, as a consequence,
shipping quotas had to be reduced relative to those originally
requested. Many companies, including major producers such
as Rio Tinto and Xstrata, were affected. Capacity at Newcastle
Port, New South Wales, is being expanded to around 150
million tonnes annually – a 50 per cent increase on present
capacity – but work will not be completed until 2009–10. In
addition to these problems, tropical storms caused significant
disruption in June.
In December, Rio Tinto announced a new investment of
US$991 million to extend its Kestrel Mine in the Bowen Basin
region of Queensland, Australia, in order to increase the
company’s share of the growing demand for exported coal,
particularly for Asian markets. The extension, which is subject