Peabody says demand for coal to grow by 1.2 billion tonne in next 5 years

Annual world coal demand is expected to grow by 1.2 billion tonne in the next five years, with more than 80 percent of  that growth coming from China, according to a statement released by Peabody Energy yesterday.

The statement comes after Peabody closed the Wilkie Creek coal mine in Queensland less than two weeks ago blaming “challenging market conditions”. The company also culled 450 contractor positions across Australia in June. 

The statement was made as part of an announcement that Peabody and China’s Shenhua Group have entered into an agreement to create Sino-Pacific Coal Trading Corporation Pte. Ltd., a Singapore-based joint-venture company that will supply Shenhua’s growing coal import demand with thermal coal from Peabody’s assets.

Shenhua is one of the world’s largest importers of thermal coal, primarily servicing the Chinese and Asian markets.

Peabody Energy President – Asia and Trading Christopher J. Hagedorn said the new 50/50 joint venture between the two companies represents a significant milestone in Peabody’s Asia growth strategy.

“Globally, Shenhua is one of the world’s largest importers of thermal coal and this important partnership will give Peabody a priority position to supply Shenhua’s growing import needs with coal from Peabody’s expanding global platform,” said Hagedorn.  “Annual world coal demand is expected to grow by 1.2 billion tonnes in the next five years, with more than 80 percent of projected global demand growth in China and India.  Over the last decade, Peabody has been reshaping its global platform to better serve this high-growth region.”

Subject to regulatory review, Sino-Pacific Coal Trading Corporation is expected to begin operating in 2014, sourcing coal from key global supply basins to provide Shenhua with thermal coal for its Chinese generating subsidiaries.

The Shenhua Group is the largest coal company in China and the largest coal distributor in the world. It is a large-scale energy company, which takes coal as its foundation, covers electric power, railway, port, shipping, coal-to-liquids and coal-to-chemicals, and integrates production, transportation and sales.  As of the end of November of 2013, Shenhua had more than 65 million kilowatts of installed power generation capacity.