May 04, 2008

Coal price hikes stimulate wave of mining upsurge

It is reported that coal resources are becoming more important due to rising global energy demand and hovering high oil price. Coal prices eyed rapid gains in recent months as a result of bad weather, governmental curbing policies as well as vigorous demand as its rising magnitude even surpassed that of oil price rise, triggering upsurges of coal mining fever across the world. Against such a backdrop, global leading coal producing countries are rushing to expand their output.

Australian Bureau of Agriculture & Resource Economics noted the Australias new capacity utilization would reach 18.6 million tonnes up by 5% from the year ago level. South Africa also plans to add domestic coal supply to ease down energy shortfalls.

Expanding the handling capacity of Richards Bay also implies that more coal will be shipped out from South Africa.

In order to secure plenty of energy resources to meet economic expansion target, Indian government has urged domestic miners to expand coal output and increase imports. The country plans to hike its coal output by 50% YoY to 650 million tonnes by 2012.

Main coal producing countries like China, India, America and main importers as Japan and Korea are all intensifying investment in overseas coal mining projects. China Shenhua Group Corp lately announced it will invest in its Mongolian and Australian coal mine projects. India also intends to pour some money in South Africa for coal resources. Foreign investment can not only ensure domestic supply, but guarantee some profits when coal price goes up.

Due to energy crisis, many coal mines that have halted production now resumed operations. Britain is a good example in this regard, though it has promised to cut greenhouse gas emissions by 60%. Coal industry in the country still weighs heavy in energy structures. In Britain, two coal-pits have resumed operations with other three heading on the way. Mitsui & Company Limited in Japan also expressed their interest in re-development of coal mines in Hokkaido, which have been closed down due to higher mining costs in early 2000.

(Sourced from MySteel.net)