World Demand for Thermal Coal will Increase

We have a listener to our radio segment on Emerald 4HI who has been employed by the same company in the coal industry for many years, has $100k in savings, is looking at buying one of our executive homes in Brisbane. He is concerned about losing his job if there is a downturn in the coal industry.

His question is that if he buys a property from us, how does he protect himself to be able to meet his loan repayments if he loses his job?

Firstly, I have no concerns about the future of the coal industry, as world demand for both coaking and thermal coal is increasing and will continue to do so for many years to come.

What about the pressure to use solar, wind etc.?

The world is not about to stop making steel and they require coaking coal for this.

What about thermal coal to produce electricity?

The Australian Newspaper recently said, “Banks, Government Institutions, and Investors are being pressured not to lend to coal through a highly organised campaign that mixes moral pressure with financial greenmail. However, the inconvenient truth for activists is that coal use is booming worldwide. It is in a renaissance, despite the forces ranged against it.”

So am I saying that the world demand for thermal coal will increase in future years? It gets back to basic economics of supply and demand. There is an abundant supply of coal and it is the cheapest provider of electricity.

Currently, 41% of the world’s electricity is provided by coal and this demand for coal will be increasing every year for the foreseeable future.

The figures

The international Energy Agency predicts the global electricity produced by coal to increase by about 33% to year 2040.

In South East Asia the demand is expected to increase by just under 5% annually for the next 20 years.

This is not hard to believe when you consider the population growth in South East Asia, the hundreds of millions of people who currently have no electricity and the growing prosperity of the region.

The World Coal Association Chief Executive Benjamin Sporton, said recently “2.7 billion people rely on dung and wood. Coal plays a critical role in bringing affordable, reliable electricity to hundreds of millions of people in developing and emerging economies.”

The bottom line is that despite the continuing war of attrition from environmental groups, the future of the coal industry is assured.