International Coal Scene at Mid-2011 Donald K. Cooper Global Director of Coal Services Behre Dolbear...
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![Page 1: International Coal Scene at Mid-2011 Donald K. Cooper Global Director of Coal Services Behre Dolbear Group, Inc. Society of Mining Engineers - NYC – 10.](https://reader030.fdocuments.in/reader030/viewer/2022032701/56649c875503460f9493f729/html5/thumbnails/1.jpg)
International Coal Scene at Mid-2011Donald K. Cooper
Global Director of Coal ServicesBehre Dolbear Group, Inc.
Society of Mining Engineers - NYC – 10 May 2011
“We Know the Business of Mining”
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BEHRE DOLBEAR
This Evening’s Presentation 2011 “Coal Industry Lite”
Describe Behre Dolbear and its coal segment
Provide 35,000-ft. view of the industry Global production and consumption Markets Industry trends
Recap some recent Behre Dolbear engagements
Provide a few country “factoids”
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BEHRE DOLBEAR
The Behre Dolbear Group Since 1911 – oldest mining consultancy on the globe
Started here in New York
Offices in eleven of the world’s most important cities
Full range of: Services Mineral commodities Locations Client types
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BEHRE DOLBEAR
Behre Dolbear Coal Professionals 15 Senior Associates and Consultants – pure coal Almost 500 Man-years of commercial experience Former industry executives – not “consultants” All disciplines of the industry Coal experience spans the spectrums:
Peat to anthracite UK and Germany to Mozambique and Mongolia Surface–Underground–CBM–Gasification-Coal Waste
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BEHRE DOLBEAR
Typical Coal Engagements
Exploration program management
Scoping, prefeasibility and feasibility studies
Resource and reserve re-categorizations
Advisories to regulatory agencies and exchanges HKEx, SEC, TMX, DOJ, IRS, MSHA, BLM, etc.
Independent technical reports to support IPOs/POs
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BEHRE DOLBEAR
Typical Coal Engagements (cont.)
Merger and acquisition support Due diligence Valuations (and evaluations)
Governmental assistance Privatization/Monetization
Mining regulations
Litigation assistance and expert witness work
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BEHRE DOLBEAR
Let’s Look at the Industry
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BEHRE DOLBEAR
Corporate Growth ObjectiveWhere is Coal Found?Where is Coal Found?
World Coal Association – April 2011World Coal Association – April 2011
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BEHRE
DOLBEAR
Production
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BEHRE DOLBEAR
How Do We Mine It?
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BEHRE DOLBEAR
World Coal Production Found in ±100 Countries (35 are “Producers”)
“Reserves” for ±190 Years (±1.4 Trillion Tonnes)
2010 Global production = ±7.4 Billion Tonnes*
EXACTLY HOW MUCH COAL IS THAT?
*Various early estimates: ±2 or *Various early estimates: ±2 or 3%3%
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BEHRE DOLBEAR
It’s a Long Trainload!
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BEHRE DOLBEAR
Exactly How Long is That Train?
It’s a train that wraps the earth ±18 times
OR One that stretches to the moon and back
(almost)
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BEHRE DOLBEAR
That’s a Very Long Trainload!
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BEHRE DOLBEAR
Top Six Global Coal Producers – 2010*
China 3,680 Million USA 1,000 Million India 580 Million Australia 410 Million Indonesia 350 Million Russian Fed. 300 Million
*Early Approximations - Various Sources (±2 or 3%)*Early Approximations - Various Sources (±2 or 3%)
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BEHRE DOLBEAR
Consumption
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BEHRE DOLBEAR
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BEHRE DOLBEAR
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BEHRE DOLBEAR
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BEHRE DOLBEAR
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BEHRE DOLBEAR
Global Steel Global Steel ConsumptionConsumption
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BEHRE DOLBEAR
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BEHRE DOLBEAR
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BEHRE DOLBEAR
MARKETS - PRICING
Why Doesn’t Behre Dolbear do Independent Price Forecasting?
(Because it makes us look too much like blindfolded drunks throwing darts!)
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BEHRE DOLBEAR
" Concensus " Near-term Coal Pricing* Scenarios from 3Q 2010
0
50
100
150
200
250
300
350
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
US
$ pe
r To
nne
Premium Hard Coking Coal Semi-Soft Coking Coal Thermal Coal
*Australian Benchmark Prices
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BEHRE DOLBEAR
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BEHRE DOLBEAR
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BEHRE DOLBEAR
Is There a Lesson Here?
Rely less on prognostication and crystal balls Give weight to historical cost-price relationships Consider average long-term trends in pricing Be sure to do some healthy sensitivity analysis
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BEHRE DOLBEAR
Current “Contract” Coal Prices(1)
Hard Coking Coal: US$320 to US$350 per T (2) Soft Coking Coal: US$240 to US$265 per T (2)
Thermal Coal: US$130 to US$140 per T
(Forecasts made recently as Dec-2010 have gone bust)
(1) NOW “Quarterly” Australian Benchmark(2) ±35% to 45% increase QoQ
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BEHRE DOLBEAR
Global Coal Movements – 2010*Global Coal Movements – 2010*
*Generalized - Annualized*Generalized - Annualized
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BEHRE DOLBEAR
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BEHRE DOLBEAR
Recent Coal-Related Engagements Australia Botswana Brazil Canada China Colombia Germany India Indonesia
Mexico Mongolia Mozambique New Zealand Nigeria Philippines Russia USA Vietnam
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BEHRE DOLBEAR
Australia BD doing its standard mix out of Sydney office Major news – Q’land flood impacts remain Still expected to be major export powerhouse Long-term challenges from
Indonesian thermal coal Mozambique met coal (Australian taxation fever is not helping much)
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BEHRE DOLBEAR
China Currently the 2400 lb. gorilla on the globe Closing hundreds of mines - still @ 17% growth Word of some areas being declared “Rare” coal Steel glut inhibiting met coal usage (short-term) Behre Dolbear doing numerous:
Independent Technical Reviews to support IPOs Due diligence and evaluations Valuations and M/A assistance
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BEHRE DOLBEAR
Colombia BD doing scoping studies and project due
diligence Two tiered industry by geography
Traditional thermal coal in Guajira peninsula (Potential) met coal in Boyaca, Cundinamarca, etc.
Proving up significant met coal resources Steeply dipping / difficult to mine Excellent coking characteristics Infrastructure and transport are near-term constraints
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BEHRE DOLBEAR
India Population forecasted to overtake China’s by 2030 Tremendous demand growth “Ultra-Mega” steel producing projects underway Generally poor quality indigenous met coal supplies Outsourcing coal supplies all over the globe Equity and JV deals abound – steel and power companies Strong looks at Indonesia, Mozambique, USA, etc. BD currently doing Mozambique met resource reviews
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BEHRE DOLBEAR
India Will Be (Is?) World’s Largest Coal ImporterIndia Will Be (Is?) World’s Largest Coal Importer
World Coal InstituteWorld Coal Institute
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BEHRE DOLBEAR
Indonesia Forecast to be world’s fastest growing exporter Perhaps largest CAPEX increase for coal mines Sub-bituminous thermal coals, but:
Famous for ultra-low sulfur content Geographically well positioned for Oceana-Asia sales
BD doing numerous green field evaluations BD did share valuation to support major litigation
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BEHRE DOLBEAR
Mongolia Burgeoning energy producer
YTD 2011 coal export value up 180% (YoY) YTD 2011 = 3.8 million T vs. 2.3 million T (YoY) Major low-cost surface mining projects
Infrastructure and transportation are issues BD doing a number of scoping level studies Just established a Mongolian subsidiary
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BEHRE DOLBEAR
Mozambique Major attention - new coking coal sources – all export Major international players in Tete region
Moatize - - Vale Riversdale - - Rio Tinto/Tata/CSN
Challenges: coal quality and transport (Sena RR) Operators forecasting growth to 80 MTPY ! ! Concerns about infrastructure, lead time and ramp-up BD did full-scale review of Moatize for TWB/IFC
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BEHRE DOLBEAR
Nigeria BD has worked in Nigeria since early 1990’s
Comprehensive mineral inventory US TDA coal resource and power demand study Prefeasibility study for small surface mine Currently in-country mine development advisors
30-year hiatus since demise of NNCC Finally looking at coal for electricity generation Woefully inadequate power grid
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BEHRE DOLBEAR
Vietnam VINACOMIN BD did ITR for Issuance of High-Yield Bonds Forecasting 50% increase in annual production
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BEHRE DOLBEAR
Thanks for Your Attention
Questions?