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coaltrans 2012 Coal Exporters and Buyers Meet in Istanbul Future power and steel demand in China and India will drive the seaborne coal trade BY MUNGO SMITH The 32nd Coaltrans World Coal Conference was held at the Lutfi Kirdar Convention and Exhibition Center on the European shore of Istanbul, Turkey, October 14-16. The setting was impressive; overlooking a sparkling blue Bosporus reflecting a cloudless sky, the attendees gazed across at the shores of Asia, beyond which lie their hopes for the future growth of their business. Coaltrans was visiting Istanbul for the first time since 1997 and found a country transformed. Turkey's GDP growth over the past decade has been closer to that of China than to its European neighbors. Istanbul glistens with smart new cars, new hotels and glamorous shop fronts atop of the majestic ruins of former empires, and beyond which lies the ramshackle dwellings of massive urban sprawl testifying to the rapid demo- graphic growth which has accompanied that of the economy. On the periphery of this vast city, Turkish industry is flexing its muscles all around the world. Turkey is Europe's fourth largest economy and its second producer of iron and steel, and is expected to overtake German production by 2015. Domestic consumption is booming and, miraculously, Turkey seems so far to have escaped the economic gloom that prevails in Europe. The producers, exporters, traders, transporters and buyers of coal attending Coaltrans 2012 felt reassured by what they saw. Here before their eyes they could witness a version of the Asian miracle that they hope will provide enough economic growth to keep their mines open, their ships sailing and their coal burn- ing. For in many respects they are a beleaguered bunch; growth in the West has stagnated, prices for coal and shipping have fall- en, their own governments are squeezing them with regulations and environmentalists maligning them, but the sunny and vibrant view over Istanbul encouraged optimism, and the fore- casts of the conference's numerous and notable speakers were generally upbeat. The subjects under discussion were the global state of ener- gy markets, growth in India's steel market, new scenarios for power generation, the shifting dynamics of U.S. coal, and a look at the German and U.K. markets. Turkey's industry was also examined and a session was devoted to coal transport and logis- tics. Two large conference halls were used, separated by about 40 booths inhabited by companies familiar to the industry, and countless areas for tea, coffee and networking were scattered all about. Global Energy Markets Going straight to the heart of the matter, Dr. Fatih Birol, chief economist at the International Energy Agency in Paris, set about the theme of the future of global energy generation. With Germany and Japan suddenly phasing out nuclear energy, 42 www.coalage.com North American shale gas usurping its rivals, regulations and renewables confounding expectations, and an erratic oil mar- ket, never has it been more difficult to make predictions for the future, as Dr. Birol bravely proceeded to do. He expects global energy demand to grow by one-third by 2035, but there will be almost no increase in the developed world. Increased energy efficiency, stagnating economies and environmental pressures will ensure that consumption will remain static in the West. Emerging economies are expected to lead growth and China and India alone will account for half of future growth in demand. Here he introduced a theme that echoed throughout the duration of the conference; the names of China and India sounded throughout each session like a kind of mantra to encourage confidence for the future. China is set to become the largest oil importer by 2020 as the United States increases its production and reduces consumption. Chinese oil imports were 4.4 mbd in 2010 and Dr. Birol expects them to reach 12.3 mbd by 2035, meanwhile India will eventually over- take China as the first importer of coal. The energy sector is experiencing unusually uncertain times. Energy policy, Dr. Birol laments, has taken second place to immediate economic concerns in the wake of the global eco- nomic crisis; carbon dioxide levels are at an all time high, the Durban agreements seem to have made no impact on invest- ment, while Fukushima has placed a large question over the nuclear sector. Dr. Birol predicts that renewable and natural gas will account for almost two thirds of incremental energy demand between 2010 and 2035. This is in stark contrast to the past decade, during which coal accounted for nearly half of the increase in global energy use, with the bulk of the growth going into the power sector in emerging economies. Emerging economies will remain the only drivers of growth. India's coal production will fail to keep place with domestic demand, boosting imports from 61 Mtce in 2009 to 305 Mtce in 2035—by far the largest volume of any country. Elsewhere, "we are entering the golden age of gas" Dr. Birol declared. Shale gas he considers to be a revolution. At current low prices, further developments in shale gas production are unlikely, but if prices rise, "that would change the framework for competition for coal," he said. "Combined unconventional gas output growth from North America, China and Australia could surpass that of all conventional producers." Renewables, Dr. Birol considers, also represent a major threat to coal, particularly due to government subsidies. But Dr, Birol concluded on a more optimistic note; 20% of the world's population (1.5 billion people) has no access to electricity. These people will be connected to power and he predicts that November 2012