Despite global economic volatility, coal mining production expected to rise
Although concerns over slower U.S. and Chinese growth and Europe's unstable economic platform have brought coal mining company shares to low levels not seen since the 2008 market crash, a new report suggests hope is on the horizon, according to Steel Guru.
Despite the recent low shares, coal mining production levels and investments in new expansion projects have held their robust forecasts as emerging market demand continues to soar.
As the world's coal markets expand, Australia is primed to become a major site for new developments. Mitsubishi Corporation and BHP Billiton have come together to capitalize on the the new projects, announcing they plan to split a $4.2 billion investment into new coal mines found in the Queensland Bowen region. The financing is said to be for the development of a new mine, Caval Ridge, and will also help to pay for the expansion of the Peak Downs Coilliery, which is expected to begin sometime in 2014. The expansion is expected to increase the life of the mine by more than 60 years, the news source stated.
BHP is also looking for investors in other projects currently in various phases around the world. In Indonesia, the company is looking to finish its pre-feasibility studies of six separate coal mining contracts.
The report indicated that metallurgical coal production through 2025 will be largely supported by growing demand from China and India, which are expected to contribute 68 percent of the world's demand growth and a 3 percent world-wide increase in demand for steel-making components by 2020.
China estimates its steel production will increase to 1.1 billion metric tons by 2025, of which 60 percent could be supplied by the growing operations in Australia's Queensland Bowen region.
The Brisbane Times reports that the region's new mine expansions have been given the go-ahead after mining billionaire Gina Rinehart agreed to build a coal rail corridor through the province.
According to the news source, the $2.2 billion railway will stretch from the Alpha Coal Mine in the Galilee Basin to the Abbot Point coal port near Bowen, a span of roughly 360 kilometers.
The railway has been deemed an "infrastructure facility of significance," by the state government, as it is expected to increase the region's overall coal output by 35 percent.
In Indonesia, thermal coal production has also remained strong despite the struggling global economy. PT Adaro Energy, on of the largest coal miners in the country, has reported that it expects to increase thermal coal production in 2011 to between 46 and 48 metric tons. By the end of September 35.3 tons had been produced, according to Steel Guru.
Coal production in Indonesia was found to have the largest growth of exports in the world. The country is expecting to increase overall coal production from 350 metric tons in 2011 to more than 500 tons by 2015, a 39 percent increase in global coal exports.
According to the Jakarta Globe, the stellar mining outlook within the country is being driven by new investments being utilized by several companies. ABM Investama, an Indonesian coal company, recently announced plans to raise $291.2 million in an IPO next month. If the sale is completed, it would mark the third largest IPO by an Indonesian company in 2011.
As mining companies ramp up operations around the world, the demand for several mining-related services will likely surge as well. Mining equipment manufacturers, mining consultants and geological services will need to be ready for the growing demand in the coming years.