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The global coal reserves are severely over estimated, not in one country: in all countries of the world. They are calculated just on actual presence, regardless the technological chance/possibility and/or economic cost of exploration. Oversizing them with 50 till 75%. The global coal demand on the other will explode the next years. There is low-grade thermal coal (used for power production) and high-grade cooking coal (used for iron/steel production). Concerning the low-grade thermal coal: There were not so many coal fired power plants in construction as there are today. They were never bigger than the ones that are in construction right now: demanding all a complete coal train as fuel per day when they are in production. Even right now very bad quality (in terms of energy and chemical ballast) thermal coal finds it way to China and India these days. Coal and the climate discussion are contrary, but coal will win the dispute. Talking about CO2 reduction is easy, using less hydrocarbons is more difficult. Coal is a hydrocarbon fuel with a lower energy to power ratio and thereby not the favorite flavor of the Climate Change focused community of the world. But prosperity is something each and everyone wants, and prosperity is about affordable energy, so coal will win this dispute. The world should implement more coal technology. Not burning it, but gasification it. Cleaner (in terms of acid rain facets), more energy efficient (and thereby less CO2 emission) and by its higher energy efficiency cheaper. All the current in construction coal to power plants face the possibility of never or only sometimes been used, not due to environmentalists, but due 1) physical shortage of thermal coal (just no 'fuel' available), 2) economic outdated due the more efficient gasification based process (as coal prices rise, efficiency becomes more important facet), 3) relocating of power production to coal mining locations (transporting electrons, instead of coal). Concerning the high-grade cooking coal. As China in June 2008 offers the iron ore miners a 100% price rise for iron ore in exchange for delivering guarantees, the future prices of cooking coal will be at least very soon double of the current price. Taking in calculation that 1) energy is more scarce than iron-ore and 2) cooking coal is a high-grade/scare/premium coal type, the chances that high-grade cooking coal will be tripled in price the next year would not be strange. The fact that coal reserve figures will be lowered next years to realistic levels, coal reserves more and more will been nationalized and energy demand will grow severe, the price of coal (and thereby the price of power and iron/steel) will be doubled each year the next years till it reaches it economic maximal point and than also for coal the granting distribution system will be put on top op de supply/demand exploration model, that already is on top of the exploration costs model. Coal will be as much geopolitics as oil/gas/uranium is these days. In-situ technologies (harvesting the coal energy underground) will rise. Coal to gasoline technologies will rise in oil deficit countries. Everybody with a sense for cost of investments and energy process efficiency knows without any calculation that the gasoline produced this way will not be very cheap, but the cheap oil/gasoline believers still got very much media attention. Common sense we've lost due to cheap oil addiction. Investors in coal-to-power plants are (like investors in each carbon based power generation plant) gamblers. Building a very capital intensive facility with no outlook at all for nor the availability of fuel and the price of the fuel, in a market perspective where both (availability and price) are problematic. Power generation is now a general activity. This will change. Coal-to-power will be done by total other type players than gas-to-power. The size is different, the geographical density is different, the fuel logistics is different and the fuel purchase is different. This availability and price uncertainty is a very uncomfor­table situation by such mega investments. This will lead to this uncertainty solving strategic choices/alliances like that coal-to-power plants will or taken over by coal miners or will taken over miners. But more likely is that coal-to-power will be done on the coal locations, why carry around with such material as electrons are more easy and more cheap to transport by HVDC/HTS/LTS or maybe as hydrogen. Coal exploration can be done or in mining (surface or underground) or by in-situ (underground technology). The uncertainness of coal availability and coal prices will make for example solar based energy investments much more attractive: The availability of sunlight is in daytime 100%, each day, the sun doesn't strike or have logistical/political problems. The fuel price of sunlight is $/E 0, the sun doesn't invoice daily fuel costs. These two major advantages of renewable energy harvesting will hit both coal-to-power operations and investments. Coal-to-power investments will in the future only be done by economic gamblers with lots of equity (as banks will turn away from coal-to-power due the supply uncertainness and price uncertainness). An other issue is the low efficiency of old coal technology: this is the main reason why coal has such a bad name (old pollution technology that causes acid rain and old low efficient technology that has thereby more CO2 emission than more effective sources/technologies. The whole CO2 issue will be pushed to the background as energy scarcity grows. Market prices will change behavior more than any preacher ever could. Clean coal technology (gasification) will gain enormous popularity. Interna­tional power infrastructures will replace coal shipments. Miners will stop shipping coal and start producing power. Miners will co invest in HVDC/HTS/LTS powerlines (in combination with CSP -Concentrated Solar Power- operators and producers). Miners will invest in hydrogen research as transport or energy multiplying technology. Miners will buy enduser contracts for creating a closed circuit. Miners will have joint venture with powerlines and with customer/enduser brands/contracts operators. Miners are the Gazproms of the future. Large cities and large factories will always be energy deficit. The big question is if there is market for large cities and large factories in times of expensive energy. Delivery contacts will become more and more important. Contact prices will become more and more flexible determined by global exchange prices based on supply/demand. Coal will profit from the price rises of other energy sources and the other energy sources will benefit from the price rise of coal. Iron will become very expensive due to iron ore and coal prices due to less supply and high demand. Iron will be replaced a lot by glass/silicon material technology. Aluminum also as coal prices will rise and make the in production lots an energy demanding) aluminum very expensive. Miners will become powerful energy players. Miners will be nationa­lized, making coal also part of geopolitics. Coal has also become a commodity that is confronted with state driven revenue sharing. Miners will be confronted with a kinds of new taxes/duties where an export duty on coal often is the first one (in China 40%) later-on there will be additional other special designed duties put in place. The purpose of these duties are: 1) Stopping export in countries with state ruled energy prices for the internal/domestic market. For example China needs the coal, but as the price of coal is state regulated low (as the state subsidize energy and therefore don't like much space between guaranteed enduser price and market supplier price) and the world market price is high Chinese miners prefer to sell abroad. 2) Sharing revenues by customized taxation between miners and the governments, additional to the in the mining contract mentioned state fee per 1000 kg, as the market prices are much higher than when the contract was signed between miners and government. Steel companies and miners also will make joint ventures, and/or steel companies will go into coal/iron-ore mining, and/or mining companies will go into coal and iron-ore, and/or mining companies will buy steel companies, and/or steel companies will buy mining companies. All just to ensure long term supply and/or enforce each other earnings. Commodities are the scarcities of the 21st century. Coal can be processed to liquid fuel. The Nazi airforce was completely fueled by expensive coal originated kerosene (which was one of the reasons they lost the war).

Author: Gijs Graafland

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