Asian power generators' coal demand seen rising 6% per year to 2005

Asian demand for coal burned in power stations will grow almost six percent a year for the next five years, said Brian Horwood, managing director of Pacific Coal, one of Australia's largest exporters of the fuel.

Pacific Coal, a unit of Rio Tinto Group, the world's second- biggest mining company, estimates Asian demand for seaborne steaming coal will rise to 246 million metric tons in 2005, from 185 million tons this year. That's up from 130 million tons in 1995, and just 5 million tons in 1980.

Most of the increase in supply to Asia will come from Australia, China and Indonesia, Horwood said.

``It's being driven by the economic growth of Japan, Korea and Taiwan in particular,'' Horwood said at the Coal Forecast 2001 conference in Brisbane. The forecasts ``hold a high level of security'' as they're based on new power stations already under construction, or financially committed, he said.

Demand for electricity tends to track economic growth, and coal is the cheapest fuel for generating power. At current prices, it's one-third the cost of heavy fuel oil. Australia is the world's largest exporter of coal, and north Asian countries the biggest importers, led by Japan.

Horwood forecast that Asian coal import demand will rise 2.7 percent a year in the second half of the decade, reaching 281 million metric tons by 2010.

Worldwide seaborne coal imports will rise 3.9 percent a year to 2005, when they will be 400 million tons, from 330 million tons this year. Annual increases of 2.8 percent after 2005 will take total world shipments to 460 million tons by 2010, he said.

``Beyond 2005, the demand projections are based on estimated electricity demand and ultimately population growth,'' he said.

``Australia will need 40 million tons of annual capacity from new mines in the period 2000 to 2010 to meet demand growth and replace exhausted mines,'' he said.

This year, Australia will export 88 million tons of steaming coal, rising to 120 million tons in 2010, he predicted. Over the same period, China's exports will rise from 48 million tons to 80 million tons, and Indonesia's from 52 million tons to 80 million.

The Japanese reference price of steaming coal fell 5 percent last April, and analysts project it will rise about 5 percent next year, to more than $30 a ton. The price for immediate delivery has gained 30 percent since March, to more than $27 a ton. (*)