04 September 2012

China SignPost™ (洞察中国) #64: “Wyoming and Montana Could Become Major New Coal Suppliers to China and the Asian Market—If They Can Obtain Port Access”

Gabe Collins and Andrew Erickson, Wyoming and Montana Could Become Major New Coal Suppliers to China and the Asian Market—If They Can Obtain Port Access,” China SignPost™ (洞察中国) 64 (4 September 2012).

China SignPost™ 洞察中国–“Clear, high-impact China analysis.”©

Wyoming and Montana have the reserves and production to become significant coal suppliers to China and East Asia but need access to large port capacity on the U.S. West Coast in order to compete on price with coal from Australia and Indonesia.

Jero Wacik, Indonesia’s Energy and Minerals Minister, announced in early June that Indonesia needs to restrict future coal exports in order to preserve supplies for its rapidly growing domestic economy. President Yudhoyono’s plan to end all raw metal ore exports by 2014 and refine them locally will be one factor behind reduce coal export ability.

Indonesia’s ambitious plan could require as much as 1 gigawatt of extra electrical generation capacity—which could consume more than 5 million tonnes per year of coal. And with Indonesians buying more appliances and other power-hungry goods, residential electricity demand is growing as well, providing an additional factor that will trim Indonesian coal export potential.

With Indonesian export caps looming, China will face gaps as its exports rise because Indonesia is the world’s largest seaborne thermal coal exporter and has been one of China’s largest thermal coal suppliers. But a solution is already in sight: imports from Wyoming and Montana. Wyoming Gov. Matt Mead visited China in June 2012, in part to explore the potential for marketing coal from Wyoming, which by itself is one of the world’s largest thermal coal producers. Montana, too, is a major coal producer that is looking to export. Montana Governor Brian Schweitzer visited China in June 2011 to promote his state’s coal, wheat, beef, and tourism.

China may import as much as 250 million tonnes of coal during 2012 (coking and thermal coal combined), according to local sources. As such, Wyoming and Montana coal miners have a solid opportunity to market their low-cost, clean burning powder River Basin coal to power plants in Coastal China. …