“Coal: Growing Globally” 2009 Coal Trading Association Conference December 8, 2009
Paul Demzik President, Peabody COALTRADE International Peabody Energy NYSE: BTU
1
Trends Defining Global Coal Markets
• Strong long-term coal demand driven by developing countries • Asia-Pacific region leads economic recovery and global coal demand • U.S. markets lag recovery; long-term fundamentals favor PRB and ILB • Key elements of successful trading: global reach, market intelligence, reputation, risk management
2
1
Coal: The World’s Fastest Growing Fuel Six Successive Years Change in Global Energy Consumption Compound Annual Growth Rate 0.2%
2002 – 2008 Change
Nuclear 1%
9%
Oil
1.4% 3.0%
19%
Natural Gas
20%
Hydro
3.1%
Coal 0
37% 5
10
15
20
25
30
35
5.4%
40
Source: BP Statistical Review of World Energy, June 2009.
3
Asia Represents 90% of Nearly 3 Billion Ton Long-Term Global Demand Growth Growth in Coal Demand (Tons in Millions) Through 2030
+90
+230
+1,740
+540
+300 +40
Countries Served and Sourced by Peabody Growth 2007 - 2030 Source: World Energy Outlook 2009, International Energy Agency; Annual Energy Outlook Forecasts.
4
2
The Long-Term Growth of Electricity and Coal is Only Beginning Electricity Use (kWh) Per Person Global Coal Use Would Have to Double for India / q China to Reach Equivalent OECD Coal Use (~7 Billion Tonnes)
Kilowatt Hours Consumed per Capitta
10,000
8,000
9,803
6,425
6,000
4,000 2 130 2,130
2,000 1,684
0
618
India
China
Mexico
Russia
OECD
Source: 2007-2008 Human Development Report, United Nations.
5
Trends Defining Global Coal Markets
• Strong long-term coal demand driven by developing countries • Asia-Pacific region leads economic recovery and global coal demand • U.S. markets lag recovery; long-term fundamentals favor PRB and ILB • Key elements of successful trading: global reach, market intelligence, reputation, risk management
6
3
Pacific Met and Thermal Coal Prices Rebase at Higher Levels Current Spot Higher than Benchmark High-Quality Hard Coking Coal
Newcastle Thermal Coal $140
$300
$125
$300
$120 $250
$97
$100
Per Tonne
$200
$165 $150
$125
?
?
$80 $80
$70
$129
$56 $53 $52
$60
$115
$45
$98 $100
$40
$47
$27
$58
$50
$20
$0
$0 2003
2004
2005
2006
2007
2008
2009
Spot
2010+
2003
2004
2005
2006
2007
2008
2009
Prompt 2012 Month
Source: Third party broker data. Pricing as of November 10, 2009.
7
China Leading the Pacific Market Recovery Dramatic Shift to Net Imports Since 2003 100
China Net Coal Imports 78
exports down 50% ● 78 MT net importer YTD;
50 Tonnes in Millions
● YTD imports up 169%,
160+ million tonne shift since 2003 0
-2
-4
-25 -50
-46 -68 -83
-100 2003 2004 2005 2006 2007 2008 YTD Oct 2009 Source: International Energy Agency, World Energy Outlook 2008; industry reports.
● Structurally short of met coal ● Securing long long-term term
thermal and met coal assets ● Australia the largest coal
supplier to China YTD 8
4
India Likely to be World’s Fastest Growing Coal Importer India Coal Imports
● Up to 200 MTPA
250
importer within five years ● Coal generation up 7.4% YTD ● ~50% of plants
