CIAB Market & Policy developments 2005/06 - IEA

128. There are 27.8 billion tonnes of mineable reserves in-situ, although infrastructure
weaknesses, especially rail and port, and the distance of reserves from ports constrain
competitiveness in the export markets. However, increased domestic power station and
export demand will once more create the opportunity for old and new coal mines to
increase production.
129. There is a continuous search by economic empowerment entrepreneurs for viable blocks
of reserves to establish new mines, assisted by the Mineral and Petroleum Resources
Development Act and the Mining Charter. A number of large BEE mining companies,
previously only involved in gold, diamonds and platinum mining, are exploring brown-field
and green-field opportunities in coal. Some of these companies have made agreements
with existing independents and are waiting for opportunities to grow.
130. In 2006, almost 90% of the saleable coal production was supplied by mines controlled by
the five largest mining groups (Anglo Coal, BHP Billiton, Sasol, Exxaro and Xstrata).
Coal mines discarded 70 Mt of waste or discard coal. With the establishment of bigger
BEE mining companies such as Exxaro, Shanduka and African Rainbow Minerals
(ARM), a greater shift to BEE ownership is expected.
131. 2006 saw Indonesian hard coal production grow by 11% to 169 million tonnes. Exports
continue to grow at a rapid rate, with the 2006 level of 129 million tonnes showing an
18% increase on the previous year.
132. Russian hard coal production grew by 30 million tonnes (15%) to 233 million tonnes in
2006, building on the previous year’s 15 million tonne growth. Russian hard coal exports
increased by 17% to 92 million tonnes, with the increase more than accounted for by
steam coal. Coking coal exports declined by 2 million tonnes.
133. In the United States of America, total coal production attained a new record of 1,163
million short tons (1,056 million tonnes) in 2006, a 2.8% increase on 2005. Hard coal
(bituminous and sub-bituminous) production totalled 1,083 million short tons (982.5
million tonnes) and brown coal (lignite) production was 79.8 million short tons (72.4
million tonnes). Production increased in most major coal producing states, with demand
driven in large part by electricity utility efforts to rebuild inventories. Rail transportation, a
problem that contributed to inventory depletion in 2005, was considerably improved in
2006. Although some track upgrading continues in 2007, production this year has not, in
the main, been affected by transportation issues. Production has however been affected
by slower demand for inventory build and for consumption at electric power plants.
Preliminary EIA data show that at the end of 2007 production was down by 3.5% in the
Appalachian states, by 0.2% in the western region and by 1.0% in the interior region. In
total, production was down by 1.4% when compared to the record levels of 2006, end the
year at approximately 1,146 million short tons (1,040 million tonnes).
134. In 2006, production of coal exceeded domestic demand and exports. Excess production
plus yet another record year for imports - the U.S. imported 36.2 million short tons
(metric: 32.8 million tonnes) - contributed to a 40 million short ton addition (metric: 36.2
million tonnes) to power plant inventories. At the close of 2006, power plant inventories
were at their highest level since 2001.
135. Overall, imports in 2007 are forecast to be approximately equal to the record set in 2006.
In the ten months to October 2007, imports were essentially equal to those in the first ten
months of 2006. Imports from Colombia and Indonesia continue to increase, but imports
from both Venezuela and Canada have declined. Several east coast ports are in the
process of increasing their capacity to receive imported coal, indicating that over time
imports will continue on an upward path.
- 21 -