U.S. Coal Mining to Rise 5% as Coal-Fired Generation Under Construction Worldwide Reaches 93 Gigawatts

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Researched by Industrial Info Resources (Sugar Land, Texas)--With more than 93.7 gigawatts (GW) of coal-fired power generation under construction worldwide, coal demand is on the rise. As one of the world's leading coal resources along with Russia, China and India, the U.S. is poised to take advantage of this growing trend, especially with its strong transportation, storage and distribution infrastructure. In a recent presentation at the 2008 MINExpo, Andy Blumenfeld, Vice President for Market Research of Arch Coal Incorporated (NYSE:ACI) (St. Louis, Missouri), spoke about the positive market trends promoting coal for the future. Strong domestic and global demand for steam and metallurgical coal bode well for U.S. coal mining companies like Arch Coal, which is positioned to take advantage of growing U.S. and export market demand. Domestic consumption and export tonnage are on the rise.

Click on the image at right to view a chart showing the distribution of global coal-fired generation unit additions.

Net exports of coal were up 12.1 million tons through July 2008 compared with the same time period in 2007. Steel mill production increases in Asia and South America are driving demand for U.S. metallurgical coal. In addition, steam coal is in high demand worldwide as developing nations produce more power. The U.S. is in a strong position to supply coal to the export market because of abundant supply and excess port capacity left over from a high export period in the early 1990s.

Blumenfeld mentioned a build-out of 17.5 GW equating to 62 million tons of additional coal demand over the next four years in the U.S. This matches data from Industrial Info, which is tracking 38 units currently under construction totaling 17.9 GW. In addition, more than 44 GW of new coal-fired generation units are in the preconstruction stages (planning and engineering) in the U.S. The build-out of new coal-fired generation units in the U.S. will require a 5% increase in coal supply. Globally, this is a drop in the bucket as more than 473 GW of coal-fired generation are under development outside of the U.S. More than 75 GW of that is under construction and will require approximately 266 million tons of additional coal supply.

Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.