A client meeting yesterday on shale gas monetization began interestingly with questions on coal’s future. Cheap natural gas and sluggish economic recovery are making it difficult for coal to be a competitive fuel for power in North America. Overseas, Europe continues to suffer from economic weakness and uncertainty, while emerging economies such as China and India are not growing as fast as they did in the past decade. Collectively, the outlook is bleak, a number of miners reported disappointing quarterly results this year, and the depressed prices are impacting exporters globally.
But this would not be the first time that the industry’s future has been questioned. Coal is cheap and abundant making it a very competitive fuel for power and with technology advances in generation efficiency and emissions reduction, it will be difficult to displace coal as Europe is finding out. Further, although China and India may have recently slowed, they will inevitably drive a disproportionate share of global economic growth in the long-term. That growth will be fueled by thermal as well as metallurgical coal driving exports from various regions including American miners.
