With news that Queensland plans to go ahead with the IPO of shares in its coal freight business this month, the problem of transporting coal from mine to end user is again highlighted. It is also a problem that will not go away quietly with global coal trade likely to increase as coal producing countries look to boost exports to cash in on demand from Asia.
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Even exporters that traditionally serve the Atlantic market expect growth to be driven by Asia. According to David Khani, research director at FBR Capital Markets, 80% of Colombia’s growth could be driven by Asia – either directly (Colombia shipped over 3 million t of coal to China in Q1 of this year) or indirectly (with more South African coal going to India, demand for Colombian coal from Europe will increase).1
Transportation will, then, continue to be the biggest headache in the coal supply chain. And railways can be particularly troublesome. Major miners, including BHP Billiton, Rio Tinto and Xstrata, opposed the QR National IPO, fearing the newly privatised industry will have too much control of the industry – by no means an irrational fear if experience elsewhere is anything to go by. South Africa and Canada both have longstanding issues with their rail networks, while the Mongolian Government recently rejected a coal export rail link directly to China over fears it would give the Asian giant too much influence over Mongolia’s vast coal reserves. Coal will be exported via Russia instead (not that Russia is without its own logistical challenges).
On this theme, this month, World Coal will attend the 30th anniversary Coaltrans World Coal Conference in Amsterdam, the Netherlands. The conference, which specialises in the trade and transportation of coal, has a packed programme that will address some of the issues mentioned above. World Coal will be at stand 5 in the exhibition, so do come along and say hello.
KIMBALL, J., “Asia seen spurring bulk of Colombia coal demand – FBR”, Coal Weekly, (Reuters; 23 September 2010), p. 4.