...MBA-IB, Sec: A 1226112109 The World's Greatest Coal Arbitrage: China's Coal Import Behavior and Implications for the Global Coal Market Summary China is home to the world’s second largest proven coal reserves after the United States. In addition, prior to 2009, China was a net coal exporter. Coal is a cornerstone of the Chinese economy, representing 77 percent of China’s primary energy production and fueling almost 80 percent of its electricity. Moreover, China is the world’s top coal consumer, accounting for nearly half of global consumption in 2010. Over the past decade, China’s domestic coal output has more than doubled while its coal imports have increased by a factor of 60—the country’s dependence on other nations’ coal exports is growing. In 2009, the global coal market witnessed a dramatic realignment as China burst onto the scene, importing coal from as far away as Colombia and the United States. With 182 million tons (Mt) of coal sourced from overseas suppliers in 2011, China has overtaken Japan as the world’s top coal importer. Moreover, as the world’s top coal consumer, China’s imports could rise significantly again by 2015. China’s recent move from being a net coal exporter to a net coal importer portends significant changes on the global stage, especially in terms of climate change. Understanding China’s rising coal imports is crucial for managing their global impact. Introduction In 2009 the global coal market witnessed one of the most dramatic realignments...
Words: 1893 - Pages: 8
... | |Musa Harb | |3/15/2010 | |FIN 573 | Contents Executive Summery 4 Business Overview 4 Introduction 4 Industry Analysis – Mining Industry 4 Industry Segments 5 Surface Mining 5 Underground Mining 6 Aftermarket 6 Industry Cycle 7 Industry Competition 7 Coal 7 Iron 9 Copper 9 Oil Sands 9 Mining Industry Historical Trends & Prospect 10 Business Description 11 Surface Mining Segment 11 Surface Mining Products 13 Production and Distribution 14 Suppliers & Raw Materials 15 Research & Development 15 Underground Mining Segment 15 Underground Mining Products 17 Production and Distribution 17 Suppliers & Raw Materials 18 Competitive Environment 18 Barriers to Entry 18 Bargaining Power of Suppliers 18 Bargaining Power of Buyers 19 Threat of Substitute 19 Degree of Rivalry 19 S.W.O.T 20 Business Strategy 20 Expand Product Lines 20 Products Efficiency 21...
Words: 9812 - Pages: 40
...Definition of coal: • caustobiolitică a sedimentary rock that comes from vegetal incarbonizarea. • the transformation is slow in the absence of atmospheric oxygen at elevated pressures and temperatures that depend on the depth at which the plant is accumulation. Classification of coal: Coal (7000-9000 kcal / kg): anthracite, coal Quality coal (2600-5000 kcal / kg) brown coal, lignite, peat Historically the use of coal Late nineteenth century - coal had a role in the development of industry (coal century). Widely used as fuel for steam engine - James Watt (creator of the first motor efficiency). The widespread use of coal: Getting coke resulting from the high temperature carbonization process, the distillation of coal in the absence of oxygen. The coke used as fuel in the steel (for obtaining one ton of steel requires 600 kg coke). The material or by-product in the manufacture of iron, calcium carbide and other industrial thereof. Fuel for power generation and chemicals. construction materials fuel for power stations and cement factories (3/4 of the demand for coal) Chemical Industry Getting paints, plastics, synthetic fibers, fertilizers, etc.. Pharmaceutical industry. Domestic heating fuel Synthetic Fuel Coal Liquefaction Evaluation of coal resources: 1913 - International Geological Congress in Turin (7100 billion tons) - North America 68% -...
Words: 3184 - Pages: 13
...Wesfarmers Coal division, with mining interests throughout Australia, is part of Wesfarmers Limited, a major diversified Australian public company. They only produce thermal (steam) coal and metallurgical (coking) coal, with the latter being exported (Figure A). As shown in Figure B coking coal is priced much higher than thermal coal. The firm’s coal interests include the Curragh mine in Queensland’s Bowen Basin, the Premier Coal mine at Collie in Western Australia’s south west, and a 40 per cent interest in the Bengalla mine in the Hunter Valley of New South Wales. Before analysing the challenges, it is beneficial to examine the market Wesfarmers operates in. The marketplace for coal is domestic, with the majority exported on the global market. The coal industry can be described by the classic perfect competition model via the following characteristics (Earl & Wakeley, 2005: 226-227): • Large number of potential buyers (global market) • Large number of potential competitors. World Coal Institute estimates that recoverable coal reserves are in more than 70 countries and supply will last approximately 155 years (World Coal Institute: 2007). • Large number of current competitors. Each competitor sells a perfect substitute for Wesfarmers coal. • There is no price regulation in the coal industry. According to Earl and Wakeley (2005: 227), these characteristics would make Wesfarmers a price-taking firm which has no control of the price it charges for coal. It...
Words: 283 - Pages: 2
...Wesfarmers Coal division, with mining interests throughout Australia, is part of Wesfarmers Limited, a major diversified Australian public company. They only produce thermal (steam) coal and metallurgical (coking) coal, with the latter being exported (Figure A). As shown in Figure B coking coal is priced much higher than thermal coal. The firm’s coal interests include the Curragh mine in Queensland’s Bowen Basin, the Premier Coal mine at Collie in Western Australia’s south west, and a 40 per cent interest in the Bengalla mine in the Hunter Valley of New South Wales. Before analysing the challenges, it is beneficial to examine the market Wesfarmers operates in. The marketplace for coal is domestic, with the majority exported on the global market. The coal industry can be described by the classic perfect competition model via the following characteristics (Earl & Wakeley, 2005: 226-227): • Large number of potential buyers (global market) • Large number of potential competitors. World Coal Institute estimates that recoverable coal reserves are in more than 70 countries and supply will last approximately 155 years (World Coal Institute: 2007). • Large number of current competitors. Each competitor sells a perfect substitute for Wesfarmers coal. • There is no price regulation in the coal industry. According to Earl and Wakeley (2005: 227), these characteristics would make Wesfarmers a price-taking firm which has no control of the price it charges for coal. It has...
Words: 2279 - Pages: 10
...__________________________________________ Dr. Pek-Hooi Soh Senior Supervisor Assistant Professor __________________________________________ Dr. Aidan Vining Second Reader CNABS Professor of Business and Government Relations Date Approved: __________________________________________ i ABSTRACT Methanex is the world leader in methanol production and marketing. China is an important market; by 2014 it is forecasted to account for 50% of global demand. The purpose of this project is to determine whether Methanex should invest in methanol production in China. The project approach uses a multi-goal analysis focusing on three goals: (1) Consistent with Corporate Vision, (2) Sustainment of Existing Competitive Advantages, and (3) Profitability. Based on the analysis, the project concludes that Methanex should not produce methanol in China until coal to methanol technology is more profitable and environmentally feasible. The project also proposes a hybrid alternative that focuses on increasing market share and footprint in China, while continuing to monitor developments in coal technology. ii EXECUTIVE SUMMARY China is an increasingly important...
Words: 20413 - Pages: 82
...April 22, 2014 No More Consumption of Coal After the industrial revolution, energy is urgently needed for both daily life and industries. For hundreds of years, human beings have relied on the consumption of energy. People not only cannot live without them but also have to increase the amount for their better living methods and better life quality. Problems come along with increasing energy, especially when the major part of the energy comes from burning coal. Pollution caused by excess burning of coal and trade problems caused by coal prices and coal reserves are so apparent that need to be addressed. However, the advantages of burning coal for energies are so clear for its cheaper price compared to other energies. The balance between benefit and cost is hard to maintain. The choice between continuing current coal consumption and a healthy future is hard to make. For a sustainable society and to improve the quality of the environment and reform the economy, the global consumption of coal needs to be restricted. The balance between economy and environment is hard to maintain. Burning coal for energy has lots of advantages and disadvantages. There are two opposite opinions towards dealing with excess consumption of coal. According to objective global circumstance, it is impossible to ban coal directly. So a debate about whether to restrict coal makes more sense here. The consumption of coal is a fact and there must be a substitute for coal if people want to restrict it. Renewable...
Words: 3139 - Pages: 13
...nuclear power as a means of providing for the world’s energy needs. Discuss the implications for Australia’s mining industry? Australia is the world’s largest coal exporter and has the second largest deposit of coal in the world. Although the world is currently in the throes of a global financial crisis, Australia’s economy one of the few in the developed world to stay afloat has been buoyed considerably by its exports industry, particularly that of coal. Despite Australia’s promise to reduce carbon emissions by 5% in accordance with its commitment to the Kyoto protocol, the coal industry has been lucky enough to avoid almost all penalties that other industries are set to receive under the proposed carbon emission trading scheme . This combined with Australia continuing to stall further international discussions on combating climate change has earned Australia the reputation of “A nation of climate sinners” . It is obvious that despite a lot of rhetoric on the importance of addressing climate change, the Australian government is not willing to commit to solving the global challenge of climate change to an appreciable degree while such a large part of the Australian economy is at stake. For the Australian government to fully commit to its promises on combating climate change, a way to free the Australian economy of its coal dependence needs to be found. The world is in a new era of energy production where it is no longer a question of which energy technology will prevail, but rather...
Words: 1964 - Pages: 8
...relative importance of named players in the global supply of energy. (15 marks) Energy supply is the delivery of fuels or transformed fuels to point of consumption. It potentially encompasses the extraction, transmission, generation, distribution and storage of fuels. There are a number of players involved in global energy supply including TNCs (Transnational Corporations), organisations such as OPEC (Organisation of Petroleum Exporting Countries), governments and consumers. All of these players are stakeholders in the energy market and have varying degrees of importance and influence. Energy resources are not evenly distributed across the globe, certain factors such as geographic location/relief of the land, economic ability for extraction, technology available and demand for said resource. The Middle East and Africa are the richest regions in Oil, the Middle East, Europe and Eurasia are richest in gas, and North America, Pacific, Europe and Eurasia are richest in coal. OPEC, the organisation of Petroleum Exporting Countries, is a very important player which controls the price and supply globally. It controls 3rd of the world's oil reserves, making it a very powerful player. It is a powerful cartel which has a lot of influence over global energy markets. It aims to regulate oil prices and make the price of oil more stable. However, it is accused of holding back oil in order to increase the price of oil. Dramatic rises in the price of oil from 2002 onwards were partially due...
Words: 947 - Pages: 4
...------------------- 8 7. References-------------------------------------------------------------------------------------- 10 Company Profile Teck Resources Limited, formerly known as Teck Cominco Limited, was formed in 2001 following the merger of Cominco and Teck Corporation. It is a Canadian based integrated mining, mineral processing and metallurgical company. Seven years ago in 2001(1) when the Teck Cominco merger was completed, two strong Canadian companies with a tradition of excellence in mining and metal refining were brought together. In October of 2008 (1), the management of the company announced the launch of a simplified brand name, Teck, and the formation of five business units specializing in copper, metallurgical coal, zinc, gold and energy. The company has expertise across the full range of activities related to mining, including exploration, development, smelting, refining, safety, environmental protection, product stewardship, recycling and research. Presently they are actively exploring in countries throughout the Americas, Asia Pacific, Europe and Africa. The company’s product portfolio comprises of...
Words: 2880 - Pages: 12
...Complex Market Forces are challenging Appalachian Coal Mining Complex Market Forces are challenging Appalachian Coal Mining Article summary This paper describes how environmental forces affect the coal mining industry and plays an important role in our life. We will learn that environmental forces brings threats, uncertainty and opportunities to marketers and consumers . Although this paper focus on the coal mining industry, I believe that the main points focus on the environmental forces that marketer and consumers face every day. Appalachia’s coal communities were confronted by a confluence of market factors that developed over a period of years; resulting in numerous market factors, including low domestic and international prices for both thermal and metallurgical coal, soft natural gas prices, and increased imports—primarily from Colombia all contributing to the dwindling fortunes of coal mines in Appalachia. Low prices of natural gas combined with the air-quality benefits that come with burning gas rather than coal for electricity, have eroded coal’s position as the go-to energy source for power generation. Natural gas powered plants is now on the increase and it is projected that natural gas-fired plants will account for 73 percent of capacity additions through 2040, compared with just 1 percent for coal. Appalachian coal is more expensive than coal from other parts of the United States. The high cost of Appalachian is supplanted by lower-cost...
Words: 648 - Pages: 3
...Maike Nan – 263 994 90 Due Date – Week 11 Introduction BHP Billiton, which is Broken Hill Proprietary Billiton, is an Anglo-Australian multinational mining and petroleum company. BHP started its operation in Melbourne in 1885 which is one of Australia’s largest and oldest companies, and it focused on development, discovery, production, and marketing of natural resources. In value-added flat steel products, BHP was also a market leader. In 1860, Billiton was established in The Hague, Netherlands. Billiton developed a growing and substantial copper portfolio. It was also a global leader in the metals and mining sector, and a major producer of aluminum and alumina, steaming coal, nickel, and titanium, chrome and manganese ores and alloys. BHP Ltd of Australia and Billion Plc of UK established merger in 2001, and the result was the dual listed company (DLC). BHP Billion becomes one of the world’s largest mining and Petroleum Company. It expands its business in twenty countries, and its major commodities are iron ore, metallurgical coal, energy coal, conventional and unconventional oil and gas, copper, aluminum, manganese, uranium, nickel, and silver. This essay will deeply analysis the effects of BHP Billiton’s sustainability practice on the ownership advantages. It also explains the expansion strategy of BHP Billiton, which is Joint venture and mergers and acquisitions. At last, it will show some risks which are created by the macro and external factors in the mining industry...
Words: 3105 - Pages: 13
...Demand And Supply Of Crude Oil 10/10/2009 Introduction Crude oil is a naturally occurring substance (i.e., “Fossil Fuel”, formed from organic remains over a period of millions of years) found in certain rock formations in the earth. It is a dark, sticky liquid which, scientifically speaking, is classified as a hydrocarbon. This means, it is a compound containing carbon and hydrogen, with or without non-metallic elements such as oxygen and sulfur. Crude oil is highly flammable and can be burned to create energy. Derivatives from crude oil make an excellent fuel. Uses Different types of oil that are obtained from crude oil are as mentioned below: 1. Ethane and other short-chain alkanes 2. Diesel fuel (petro diesel) 3. Fuel oils 4. Gasoline (Petrol) 5. Jet fuel 6. Kerosene 7. Liquefied petroleum gas (LPG) 8. Natural gas Certain types of resultant hydrocarbons when mixed with other non-hydrocarbons, create other products like: 1. Alkenes (olefins), which can be manufactured into plastics or other compounds. 2. Lubricants (produces light machine oils, motor oils, and greases, adding viscosity stabilizers as required). 3. Wax, used in the packaging of frozen foods, among others. 4. Sulfur or Sulfuric acid. These are useful industrial materials. Sulfuric acid is usually prepared as the acid precursor oleum, a byproduct of sulfur removal from fuels. 5. Bulk tar. 6. Asphalt 7. Petroleum coke, used...
Words: 3715 - Pages: 15
...(Reuters) - Indian coal imports are expected to rise in the financial year through March 2013 as more end-users turn overseas, prompted by a narrowing gap between the domestic and international prices of thermal coal. Excess supply has hammered international thermal coal prices in recent months, with top exporter Indonesia cutting its output forecast to around 360 million tonnes from 390 million to 400 million for 2012. Based on the current global supply and demand picture, end-users expect thermal coal prices to remain well below $100 a tonne for the next 10 to 12 months. "International thermal coal prices have almost hit the bottom," said Vinod K. Singh, adviser to global chemical and textile company GHCL (GHCH.NS), which is also a leading producer of soda ash. Coal of the grade 6,000 kcal/kg on a Net As Received basis now costs $88 to $89 a tonne free-on-board (FOB), for example, Singh said. "We do not expect it to go down any further." India's coal supply is expected to fall short of demand by 192 million tonnes in the fiscal year to March 2013, a coal ministry official said. Coal demand in India, which has the world's fifth-largest coal reserves and produces the most after China and the United States, is seen at around 772 million tonnes against an expected supply of about 580 million in the financial year to March 2013. "More and more consumers are looking at imports from mainly Indonesia and Mozambique to fulfil at least 50 to 60 percent of their thermal coal demand," said...
Words: 615 - Pages: 3
...Introduction of the article From 2013, the global coal price has decreased significantly caused by the declining coal consumption and many researches indicate that the sharp decline in coal price is structural rather than cyclical which means, unlike what the government and the coal fraternity said, demand may not rebound. Under such circumstance, the Australian coal producer, Peabody Energy is under a huge financial distress risk. In four years, the equity market value of Peabody has fallen from $US17 billion to $US2.46 billion. On that equity value, Peabody is carrying $US5.5 billion in net debt along with retired workers' pension liabilities of $US735 million. However, Peabody Energy continue to pay dividends for their shareholders in order to attract further investment while their liabilities are increasingly at risk. Peabody Energy Corp, in 2 May 2015, had an Altman Z-Score (global measure of financial distress) of 0.71 compare to its highest score of 3.04. It is in distress zone (when the score is less than 1.81), implying possible bankruptcy in the next two years. The First key account: Accounts payable According to the article, because of the unfavourable global market circumstances, Peabody Energy was not able to repay its debt which leads to a result that Peabody is now carrying huge liabilities ($US5.5 billion net debt). So the accounts payable is definitely the key account gets involved in the financial distress (West 2014). The two prime assertions...
Words: 958 - Pages: 4
