Coal Supercycle

Peabody expects Coal Supercycle – Capacity in Australia to Double

21.06.2010 | Editor: Marcel Dröttboom

Peabody Energy expects a coal supercycle, the company is advancing projects that could double its coal capacity in Australia.

St. Louis (MO), USA – Peabody Energy’s believes that the coal market is in the early stages of a long-term supercycle and sees itself in a strong position to create significant growth against this backdrop of very favourable long-term supply and demand fundamentals. In Australia, the company is advancing projects that could double its metallurgical and thermal export coal platform by 2014.

“I believe we are in the early stages of a long-term supercycle for coal. And Peabody, with its unmatched asset base, market positions and growth projects, is uniquely positioned to capitalize on this sustained trend,” said Peabody Energy Chairman and Chief Executive Officer Gregory H. Boyce at the company’s 2010 Analyst and Investor Forum in New York, where senior executives reviewed the company‘s long-term projects and prospects.

Power Generation and Steel Drivers for Growth in Coal Demand

Asia-Pacific nations are leading a historic global build-out in coal-fueled electricity generation. More than 94 gigawatts of new generation are expected to come on line in 2010, representing 375 million tonnes of coal consumption per year. If growth continues at the current pace, generators would add another 1 billion tonnes of new coal demand every three years. This comes at a time when the world faces the dual challenge of providing power to the 3.6 billion people who lack adequate access to electricity, while accommodating another 2 billion expected from population growth over the next 20 years. Global growth in steel production compounds coal demand growth. Demand for steel is projected to rise 50 percent by 2020, with a similar increase of metallurgical coal needed as a basic feedstock. Peabody estimates that seaborne coal demand will expand by some 300 to 400 million tonnes by 2015, with China and India representing half to two-thirds of this growth. The company believes that supply sources will be strained to match demand growth.

Peabody targets Growth Projects in Australia, Asia and United States

Against this market backdrop, Boyce emphasized the strength of Peabody‘s unique platform and growth projects. The company has leading positions in the fastest growing regions in the United States and Australia, and emerging opportunities in Asia. “High-growth regions offer greater opportunities to increase volumes, pricing and margins,” said Boyce. “Companies such as Peabody, who have leading positions in these regions, warrant a significant premium to peers in more mature markets.” Peabody’s Australia platform is poised to supply increasing demand for coal throughout the Pacific Rim. The company is advancing projects...

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