krisis batubara china, tukh … 171110
- NOVEMBER 16, 2010, 3:44 P.M. ET
China’s Coal Crisis
SYDNEY—The idea of peak oil—the point at which global production reaches its maximum—has fixated the energy industry for years. Now, China is grappling with a new worry: peak coal.
State-run media reported that Beijing is considering capping domestic coal output in the 2011-2015 period, partly because officials worry miners are running down reserves too quickly to meet the needs of a rapidly expanding economy.
“China accounts for around 14% of global coal reserves but its share of global coal consumption is already over triple that at 47%, which is unsustainable,” Hong Kong-based brokerage CLSA Asia-Pacific Markets said in a report last month.
Imposing a cap would be significant as China’s mining sector is already finding it hard to keep up with domestic coal demand, which has grown around 10% annually over the past decade.
Its net coal imports exceeded 106 million metric tons in the first nine months of the year—higher than the level for 2009 as a whole—and state companies have been aggressively acquiring overseas coal assets to secure long-term supply.
In the three years to September 2010, Chinese companies spent $20.96 billion on overseas coal-sector acquisitions, according to Dealogic.
An output ceiling would also underpin regional coal prices, which are near six-month highs on expectations that China will import record volumes of coal this month and in December.
While China hasn’t declared publicly it will impose a coal production cap, the idea is gathering momentum.
Zhang Guobao, head of China’s National Energy Administration, said in a speech on Oct. 27 that he doesn’t favor the country’s coal output expanding above four billion tons a year.
Policy makers are mulling an annual cap of between 3.6 billion tons and 3.8 billion tons in the next five-year plan, running from 2011 to 2015, the state-run Xinhua news agency reported earlier.
This would be unlikely to hurt large state-owned miners, such as China Shenhua Energy Co., as they have invested in modern equipment and can generate economies of scale. Shenhua aims to double its annual coal output capacity to 400 million tons in the 2009-2014 period.
However, small mines and township operations will be under increasing pressure. Shanxi province has closed scores of small mines in a bid to improve safety and efficiency, and Inner Mongolia region and Henan province are taking similar steps.
Even if no official limits are introduced, China can’t keep growing coal output much beyond another decade, analysts say. The mining sector is constrained by chronic infrastructure bottlenecks, especially road and rail, and those coal deposits that are easiest to mine have already been tapped.
Experts are starting to predict when China’s coal reserves will run out—a nightmare scenario in a country where 70% of its energy is derived from coal.
According to BP PLC, China can only continue at current rates of production for 38 years before its coal reserves are exhausted. That compares with 245 years in the U.S., and 105 years in India.
BP estimates that China had 114.5 billion tons of proven coal reserves at the end of 2009, ranking it third behind the U.S. and Russia. The International Energy Agency says China could have as much as 189 billion tons of coal that it hasn’t tapped yet.
Calculating the size of China’s coal reserves isn’t easy. The government doesn’t publish data on discoveries or how much coal can still be recovered from existing mines. Complicating matters further, China’s National Bureau of Statistics recently stopped issuing monthly output figures.
In addition, not all coal has the same energy content. That’s significant as many new discoveries in Inner Mongolia are of poorer quality than the coal reserves being depleted in Shanxi.
But the strength of China’s coal demand, and moves by miners to raise output in step, is worrying the market as well as Beijing.
Even if China’s annual coal demand growth halved to 5% then the country would run out of coal in 21 years unless it finds material new deposits, CLSA says, using 114.5 billion tons of reserves as a benchmark.
The picture isn’t much brighter when calculations use IEA estimates of China’s proven reserves. Annual consumption growth of 5% would see China run out of coal in 28 years, it forecasts.
“With either estimate, it is clear that the rapid increase of coal production puts China’s energy security at risk,” CLSA says.