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years," Corrigan said. Due to the lack of infrastructure, gas may have to seek other alternatives, he added. Global Market for Coal Will Increase According to Flesher, seaborne thermal coal supply is going to increase drastical- ly. They predict an increase in coal from Australia, Indonesia, some from the U.S. and Colombia. "There will be, over the next eight to 10 years, a substantial increase in seaborne coal," Flesher said. There is an uncertain- ty in the seaborne coal trade, he said, so producers need to focus on operational costs by reducing costs and improving productivity. U.S. coal is capped because of a lack of Western port and rail infrastructure, he said. If new infrastructure investments are made in the western U.S., this could dramatically increase U.S. coal export capacity, he said. P o r t i n f r a s t r u c t u r e , a l a c k o f a c c e s s and transportation costs are constrain- i n g t h e e x p o r t c a p a c i t y o f m a j o r c o a l p r o d u c i n g b a s i n s , S t a l l s a i d . I n t h e Powder River Basin (PRB), they are con- s t r a i n e d b y t r a n s p o r t a t i o n c o s t s a n d they are competing with metallurgical c o a l . H o w e v e r , S t a l l f e l t P R B w o u l d probably be where the bulk of exports will come from because of its low cost. He added thar central Appalachia also has limited port access. There are three p r o p o s e d p o r t e x p a n s i o n s : G a t e w a y P a c i f i c T e r m i n a l , M i l l e n n i u m B u l k Terminal and Morrow Pacific coal export t e r m i n a l , w h i c h w i l l i n c r e a s e e x p o r t capacity by 106 million tons," he said. One of the other challenges in the glob- al met market, according to Ernie Thrasher, CEO of Xcoal Energy and Resources, is the world economy with the center of growth shifting to the area rang- ing from the Indian subcontinent to Japan, as well as several countries experi- encing currency crises. " O u r c u s t o m e r s a r e s t r u g g l i n g a n d there is a level of fear and anxiety about w h a t t h e n e x t m o v e s a r e g o i n g t o b e f r o m a g l o b a l e c o n o m y s t a n d p o i n t , " Thrasher said. The largest competitor for the U.S. in the met coal industry is Australia, he said, and their currency is way down. "And they are using it against us," he said. With a majority of the global popula- tion concentrated in Asia, Thrasher said one of their many challenges is getting coal to those areas and competing with other countries that are much closer to Asia than the U.S. There is also an oversupply of coal, he said. Coal companies responded to the demand by building or expanding mine operations. Another thing affecting the industry is environmental regulations. China has initiated policies to close steel mills and cokeries that are either inefficient or in areas of high levels of pollution. They are also looking at closing many coal-fired plants and restrict the quality of import- ed coal. Of course, the U.S. is no stranger to environmental regulations regarding coal production. In several countries, there is some form of a carbon tax being proposed. Thrasher cited South Korea and its proposal of a carbon tax of $17/metric ton of coal. This country depends on coal for 44% of its electricity generation, he said. Another challenge is product substitu- tion. Steel companies and merchant coke makers are shifting to lower grade coal, which doesn't typically come from the U.S., he said. New technology is reducing the need for high-quality, U.S. coking coal, he added. Gas is also being used in blast furnaces as a substitute for coal. There is also the possibility of shale deposits spreading to other parts of the world, reducing the growth in demand for coal, he said. However, regardless of all of this, "there is no denying that coal remains the low- est cost form of energy for any group or society to improve the standard of liv- ing," Thrasher said. This is just one of the opportunities for coal, he said. Thrasher also cited plentiful supply, which can be both good and bad, existing infrastructure, and demand growth. Through 2035, the demand for coal is forecast to increase by more than 1 bil- lion tons, he said. "It's not all seaborne coal, but I think it once again reaffirms that the demand for coal will be there," he said. There aren't any unbiased energy fore- casts that reduce the global consumption of coal through 2040, he added. Although the global market continues to grow, it is challenged by oversupply and market prices. The companies that survive will be those low cost producers, he said. c o a l t r a n s u s a r e c a p c o n t i n u e d 44 www.coalage.com March 2014 Figure 4: Coal's share of electricity generation through 2035. (Source: Ernie Thrasher) CA_pg42-45_V2_CA_pg46-47 3/12/14 8:49 AM Page 44