Coal Age

NOV 2012

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coaltrans 2012 continued ambition is the security and cost of fuel to be consumed. Most (90%) of the 6.5 million mtpy industrial consumption of coking coal is imported. Sabri Oral, chief executive of Turkey's Coal Importers Association believes Turkey will be one of the fastest growing coal importers worldwide. Turkey is eager to diversify its supply and due to its geographical location, is reachable by almost all global coal resources. As all natural gas is imported, the Turks are eager to reduce dependence on it and are thus favoring development of domestic lignite production. To this end, this year a new law was passed permitting the privatization of lignite fields controlled by TKI (Turkish Coal Enterprise). Already the Soma field has been privatized. The country is also keen to attract investment in new thermal power plants, though according to Onder Kartal, a partner at Jupiter Trading, major obstacles stand in the way. These include difficulties in getting Environmental Impact Assessments, excessive red tape, high CAPEX requirements, uncertainties concerning the liberation of the market and carbon emissions costs as well as general public antipathy toward coal. Nevertheless, the short term outlook for coal consumption in Turkey is bullish and imports are set to rise significantly. Conclusion The general tone of both speakers and attendees was one of optimism. Going forward, a great deal of volatility is expected as periodic recessionary episodes may cause short-term oversup- ply and increase price volatility, but this will not alter the long- term growth story. While forecasts varied, there was a general assumption that for the next 20 years, volumes of seaborne coal will grow substantially, driven in particular by the demographic and economic expansion of China and India. Electrification of communities that are not served by the grid as well as general improvements of living standards in these countries are expect- ed to be the drivers of growth. The clouds beyond the horizon did not sully the sunny sky above the Bosporus, but the IMF has been muttering about a new global recession and the possibility of a financial crisis in India. The Chinese and Indians may become tired of living under clouds of dirty smog; Asia does not yet have an efficient carbon policy and emission reduction pro- grams are less developed. If the Chinese climate control policies are enforced, the impact for the seaborne coal trade would be severe. Consumers tired of volatility are integrating their supply chains so that India's steel giants are mining for their own coal in foreign climes. It is thus not certain that these massive coun- tries can live up to the ambitions expectations voiced at this assembly. The focus of the conference never drifted from the potential that is China and India, but it seemed ominous that for all of the enthusiasm, only one single Chinese man attended the conference. About the Author Based in Istanbul, Mungo Smith manages Global Business Reports' editorial team, which works in alliance with Coal Age's sister publication Engineering & Mining Journal (E&MJ;). www.gbreports.com November 2012 www.coalage.com 45

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