Two minute briefing: Coal

Spare a thought for coal if you have been naughty enough this year to receive a lump of the black stuff in your Christmas stocking.

There's a lot more to this commodity than the cause of a smoggy London in the 1950s.

Coal is still a major player in the globe's energy production and China is the largest consumer and producer so industrial growth here is key to future price trends.

Indeed, a recent report from the International Energy Agency (IEA) said coal would catch up with oil as the globe's leading source of energy within the next decade.

Believe it or not there are many different types of coal - a fossil fuel formed by decomposed plants - and they each have different uses, markets and prices.

Its ability to produce energy is measured in what's called British Thermal Units or BTUs.

One BTU will raise the heat of one pound of water by one degree Fahrenheit. As an illustration, a home stove puts out, on average, about 7,000 BTUs per burner and anthracite coal has a heat value of nearly 15,000 BTUs per pound.

Coal is used mainly in two main markets – steelmaking and generating power/ heating.

Metallurgical or coking coal is used to make steel while thermal or steam coal is the sort of stuff used by power stations to generate electricity.

The different types of coal have different characteristics, such as carbon and sulphur content, and this dictates its use and price. The most expensive has the highest carbon content and energy levels.

Coal is classically divided into four ranks of quality, with anthracite being the best the and oldest type of this fossil fuel.

Then comes bituminous, subbituminous and lignite - the lowest ranking type - which is used in the electrical generation industry.

Anthracite has the highest carbon content, at over 80%, and is divided into further different grades.

It is usually associated with domestic fires but can also be used in power stations. The rarer higher grades of anthracite are purer, have the highest carbon content and are used in steel-making and metallurgical industries.

Meanwhile, bituminous coal has a carbon content of 45-85% and used for electricity generation as well as for steel production.

Subbituminous has 35-45% carbon and is also generally used for generating electricity.

Finally, lignite coal - also known as "brown" coal - has a carbon content of only 25-35% meaning it has lower energy properties. Again it is used to generate electricity.

A term worth knowing in relation to coal production is "washing". This is the process where the raw material is prepared in a facility, called a wash plant, where waste material is removed, creating a higher market value and lower transport costs.

Coal used in steelmaking sells for the highest price but it is not produced in such high volumes compared to thermal coal, which has a global consumption of more than 7 billion tonnes a year - with the US consuming 1 billion tonnes a year.

It has been suggested that Asia's two fastest growing economies - India and China - may increase imports of coal by 78% to 337 million metric tons next year to drive their rapid growth and need for power.