Long-Term Trends and Outlook For Global Coal Supply and Demand

IEEJ: June 2015. All Rights Reserved.
Long-term Trends and Outlook for Global Coal Supply and

Demand
Yasuaki Kawakami1, Yuhji Matsuo1, Lu Zheng1, Atsuo Sagawa2
Summary
Japan depends on other countries for most of its coal supply, of which more than 80%
comes from Australia and Indonesia. While coal supply has remained relatively stable, the
environment for coal supply has changed dramatically. In this paper the authors projected future
trends for steam and coking coal and assessed international coal trade flows through 2040 using a
trade flow model built with the linear programming (LP) method.
Global coal consumption has persistently increased particularly over the past decade while
interests have grown in the climate change problem. The upward trend in coal consumption, which
has been driven by China so far, will continue through 2040 with India replacing China as the
demand growth center. Given a deceleration of coal demand growth in China and a decline in coal
demand in many OECD countries, the annual average global coal demand growth through 2040 will
be slower than in recent years. But demand for steam coal for power generation will continue
increasing. A coal demand increase anticipated through 2040 will rival the remarkable growth seen
in the decade between 2002 and 2012.
As it is difficult for most countries to cover growing coal demand with domestic output
alone, international coal trade will expand. New major coal flows including those from Mozambique
to India and from Russia to Asia will be created, while Indonesia, now one of the major exporters,
will refrain from expanding exports so much due to domestic demand growth and its policy of
protecting coal resources for their effective use.
In Japan, coal will remain a key energy source mainly for power generation, taking into
account the need for mitigation measures for climate change at the same time. This paper indicated
the emergence of Mozambique as a new coking coal supplier for Japan amid future changes in coal
producing and consuming countries.
Energy Data and Modelling Center, Institute of Energy Economics, Japan

Fossil Fuels & Electric Power Industry Unit, Institute of Energy Economics, Japan
This study is supported by the Ministry of Economy, Trade and Industry (METI), which has recently permitted us to
release this paper. We thank the relevant METI officials for their understanding and cooperation.
2
1. Introduction
Japan depends on other countries for most of its coal supply, of which more than 80%
comes from Australia and Indonesia. Coal has been viewed in Japan as featuring greater supply
stability than other fossil fuels, i.e. oil and natural gas. Since the early 2000s, however, the
environment for coal has seen great changes including a rapid China-led increase in global coal
demand, sharp coal price hikes, a coal trade flow change through the recent shale gas output
expansion in the United States and signs of coal policy changes in Indonesia, now one of the biggest
coal exporters in the world. Given these changes, it may be dangerous to view coal as remaining a
stable fuel in the future. How will coal demand change in the future? How will coal supply respond
to such change? How will coal trade flows change if coal supply and demand centers in the world
shift? This paper aims to answer these questions.
This paper is organized as follows: It details historical coal supply and demand data
(demand, supply and trade flows) by coal type and region through 2012 first before predicting coal
demand and supply thorough 2040 based on the trends and policy information available at present.
Later, the paper forecasts steam and coking coal trade flows in 2025 and 2040 using a trade flow
model, which were built based on the linear programming method.
There are many studies that predict coal demand over a medium to long term. But only a
limited number of studies may indicate quantitative coal trade flows while securing the flows
consistency with demand. Figuring out how the global coal demand center will change from the
present to 2025 and 2040 and how the coal trade flows will change may help policymakers to
specify challenges for securing stable coal supply for the future and consider how to secure supply
sources.
2. Global Coal Supply/Demand Trends

2.1 Consumption
Global coal consumption increased from 3,756 million tons in 1980 to 4,734 million tons
in 1989, fluctuated in the 1990s and reached 7,697 million tons in 20121)2) (Figure 2-1). Growth
from 2002 has been particularly remarkable. The annual average growth rate from 2002 to 2012
reached 4.6%. Leading the demand growth were Asian countries including China. Asian coal
consumption expanded from 2,255 million tons in 2002 to 5,023 million tons in 2012, as shown in
Figure 2-2. The increase during the decade stood at 2,768 million tons (accounting for 100%3 of the
net global coal consumption increase in the decade). Asias share of global coal consumption rose by
19.5 percentage points to 65.3%. China accounted for about 80% of the Asian coal consumption
increase. As a result, China logged the worlds largest coal consumption at 3,666 million tons in
3
This does not necessarily mean that there were no countries posting coal consumption increases in other regions
than Asia. Attention must be paid to consumption declines during the period in some countries including the United
States, which logged a coal consumption drop of 149.7 million tons for the period.
2012, far more than 822 million tons for the United States as the second largest coal consumer in the
world and 753 million tons for India as the third.
(Million tons)
(Million tons)
8,000
8,000
7,000
7,000
Latin America
and Middle East
6,000
6,000
Africa
5,000
5,000
Brown coal
4,000
4,000
Europe and FS
Coking coal
3,000
3,000
North America
2,000
2,000
Asia Pacific
1,000
Steam coal
1,000
0
0
'80
'82
'84
'86
'88
'90
'92
'94
'96
'98
'00
'02
'04
'06
'08
'10 '12*
'80
'85
'90
'95
'00
'05
'10
Note: Data for 2012 are estimates. Anthracite is included in steam coal.
Source: IEA, Coal Information 2013"3)
Figure 2-1. Global Coal Consumption (by region and coal type)
(Million tons)
Others
15.4%
South Korea
1.7%
Australia
1.8%
Poland
1.8%
Japan
2.4%
China
Others
20.2%
China
29.5%
World total
South Korea
7,696.9 m. tons
(Outer circle:
Australia
Estimates for 2012)
South Africa
Poland
2.4%
4,027.2 m. tons
Germany
Japan
(Inner circle:Results
3.1%
for 2002)
Russia South Africa
3.3%
Germany
5.0%
India
9.8%
Russia India
4.5% 7.8%
China
47.6%
2002-2012
growth
1,048.1
1,451.7
3,665.9
2,214.2
818.1
971.7
821.9
149.7
India
251.0
383.4
753.2
369.8
Russia
313.8
220.7
251.1
30.4
Germany
328.9
245.7
241.4
4.3
South Africa
122.3
151.6
187.2
35.6
Japan
118.1
161.3
183.8
22.5
Poland
174.6
140.4
139.7
0.7
Australia
101.6
130.3
137.3
7.0
39.8
76.0
127.3
51.3
1,100.3
994.5
1,188.2
193.7
4,416.7
4,927.2
7,696.9
2,769.7
2,768.4
Others
World total
Asia total
(Share in
world total)
U.S.
10.7%
2002
U.S.
South Korea
U.S.
19.7%
1992
2012
estimates
1,573.3
2,254.9
5,023.3
(35.6%)
(45.8%)
(65.3%)
Note: Data for 2012 are estimates.

Source: IEA3)
Figure 2-2. Coal Consumption by Region (10 largest coal consuming countries)
A coal consumption breakdown by use indicates a significant increase in demand for
power generation, as shown by Figure 2-3. The increase covered robust growth in electricity demand
3
mainly in Asia. Coal for power generation accounted for 65.0% of total coal consumption in 2011,
indicating a sharp rise from 49.9% in 1980.
By coal type, steam coal consumption in 2012 stood at 5,814 million tons (accounting for
75.5% of total coal consumption) and coking coal at 976 million tons (12.7%). Figures 2-4 and 2-5
show country-by-country coal consumption. Steam coal consumption increased remarkably as
demand expanded for coal as fuel for power generation. Annual steam coal consumption expanded
by 2,213 million tons during the decade between 2002 and 2012, accounting for 80.5% of the total
coal consumption growth during the period. By country, China consumed 3,087 million tons in
steam coal in 2012 (accounting for 53.1% of world total steam coal consumption), the United States
731 million tons (12.6%) and India 626 million tons (10.8%). The three countries captured 76.4% of
the world total.
Coking coal demand scored a greater growth rate than steam coal demand. Annual coking
coal consumption increased by 505 million tons in the decade from 2002. China accounted for
59.3% of world total coking coal consumption in 2012. Coking coal features massive consumption
in Asia including India, Japan and South Korea. Asian coking coal consumption aggregated 756
million tons in 2012, capturing 77.4% of the world total.
(Million tons)
8,000
7,000
759
6,000
816
821
5,000
942
4,000
902
765
3,000
641
2,562
853
867
961
913
Others
Other
industries
675
3,796
2,262
775
813
753
585
584
1,879
746
567
646
2,000
1,000
657
876
751
739
2,803
3,190
(60%)
(66%)
(63%)
4,388 4,333 4,519

4,025 4,202
(64%)
(64%)
(65%)
(65%)
(65%)
4,774
(65%)
Power
generation
Coke
production
(52%)
(55%)
(50%)
539
505
508
519
479
639
686
712
725
714
787
850
'80
'85
'90
'95
'00
'05
'06
'07
'08
'09
'10
'11
Note: Coal consumption for power generation includes consumption at combined heat and power plants.
Sources: IEA, Energy Statistics of OECD countries 2013"4), Energy Statistics of Non-OECD countries 2013"5)
Figure 2-3. Coal Consumption by Use
(Million tons)
Indonesia 1.0%
Poland
1.1%
Kazakhstan
Others
1.3%
11.0%
South Korea
1.6%
Others
14.8%
Russia 2.0%
Germany
2.3%
Russia
3.2%
1992
Indonesia
Poland
World total
5,813.6 million tons
(Outer circle:
Japan
Estimates for 2012)
South Africa 3,600.7 million tons
4.2%
India
for 2002)
10.8%
China
36.8%
Kazakhstan
South Korea
Russia
China
53.1%
India
8.9%
962.8
1,324.1
3,086.5
1,762.5
U.S.
706.9
875.4
730.7
144.7
India
192.6
321.1
625.9
304.8
South Africa
117.6
149.5
185.0
35.5
Japan
60.2
102.9
131.6
28.7
Russia
150.1
103.3
116.9
13.6
South Korea
25.4
56.0
95.7
39.7
Kazakhstan
60.0
36.3
76.3
40.0
Poland
94.2
69.4
64.1
5.3
Others
World total
U.S.
12.6%
2002-2012
growth
China
Indonesia
U.S.
24.3%
2002
2012
estimates
Asia total
(Share in
world total)
6.9
29.2
60.2
31.0
546.5
533.7
640.8
107.1
2,923.2
3,600.7
5,813.6
2,212.9
2,240.5
1,328.7
1,954.0
4,194.5
(45.5%)
(54.3%)
(72.1%)
Note: Data for 2012 are estimates. Anthracite is included.

Source: IEA3)
Figure 2-4. Steam Coal Consumption (10 largest steam coal consuming countries)
Poland
1.2%
Kazakhstan
1.3%
Others
8.9%
Germany 1.6%
(Million tons)
1992
U.S. 1.9%
Ukraine 2.8%
Others
19.1%
China
27.1%
South Korea
World total
3.2%
976.2 million tons
Poland
Japan
(Outer circle:
Others
5.3%
Estimates for 2012)
Germany 4.7% 471.2 million tons
Russia U.S.4.6%
5.8%
for 2002)
Ukraine 6.2%
India
8.6%
Kazakhstan
Japan12.4%
India
7.7%
China
59.3%
Russia
9.3%
2002
2012
estimates
2002-2012
growth
China
85.3
127.7
579.4
451.7
India
42.7
36.3
83.8
47.5
Russia
41.0
43.8
56.3
12.6
Japan
57.9
58.4
52.2
6.2
South Korea
14.4
20.0
31.6
11.6
Ukraine
42.6
29.2
27.1
2.0
U.S.
29.4
21.6
19.0
2.6
Germany
36.2
21.9
15.3
6.6
Kazakhstan
24.2
9.3
12.6
3.3
Poland
15.0
12.9
11.6
1.3
Others
112.0
90.1
87.3
2.9
World total
500.7
471.2
976.2
505.0
Asia total
(Share in
world total)
208.1
248.8
755.7
506.9
(41.6%)
(52.8%)
(77.4%)

Source: IEA3)
Figure 2-5. Coking Coal Consumption (10 largest coking coal consuming countries)
2.2 Production
Global coal production plunged on a demand decline mainly in the former Soviet Union in
the early 1990s and on a demand fall in China and Europe in the second half of the 1990s before
turning upward in response to robust demand growth after 2000. In 2012, coal production totaled
7,831 million tons (Figure 2-6).
A country-by-country breakdown shows that Chinas production growth since 2003 is
remarkable. While annual global coal production increased by 2,908 million tons from 2002 to 2012,
China accounted for some 70% or 2,013 million tons of the increase (Figure 2-7). The United States,
the second largest coal producer after China, kept annual coal output almost unchanged from around
1.0 billion tons in 1997 before posting a decline in 2012 due to a domestic coal demand drop
attributable mainly to shale gas output. India, Australia and Indonesia have steadily expanded coal
output.
6,838
6,744
6,559
6,330
5,668
5,273
4,871
4,649
4,582
4,510
4,637
4,636
4,571
4,417
4,342
4,501
4,451
4,769
4,668
4,689
4,596
4,487
4,380
4,209
4,009
3,972
3,820
4,000
3,787
Coal output (million tons)
5,000
7,831
4,000
3,500
3,000
2,500
2,000
3,000
1,500
2,000
1,000
1,000
500
0
'80
'82
Coal production
'84
'86
China
'88
'90
U.S.
'92
'94
'96
India
'98
'00
Indonesia
'02
Australia

Source: IEA3)
Figure 2-6. Global Coal Production
'04
'06
'08
Russia
'10
'12*
South Africa
Coal output by country (million tons)
6,000
4,923
7,000
6,011
8,000
7,608
4,500
7,210
9,000
(Million tons)
Kazakhstan
1.6%
Poland
1.8%
Germany
2.5%
South Africa
3.3%
Others
10.3%
China
Others
13.9%
Kazakhstan
Poland
Russia Germany
4.5%
4.3%
South Africa
4.5%
Australia
Russia
5.4%
4.8%
Indonesia
5.7%
World total
(Outer circle:
Estimates for 2012)
Inner circle:Results
for 2002)
Australia
6.9%
Indonesia
2.1% India
India
7.4%
7.6%
China
31.2%
China
45.3%
U.S.
20.2%
2002
2012
estimates
2002-2012
growth
1,072.8
1,535.7
3,549.1
2,013.4
U.S.
905.0
992.7
934.9
57.8
India
255.2
363.9
595.0
231.1
Indonesia
22.0
102.1
442.8
340.7
Australia
228.3
339.9
420.7
80.8
Russia
316.4
237.6
353.9
116.4
South Africa
174.4
220.2
259.3
39.1
Germany
314.0
211.0
197.0
14.0
Poland
198.5
161.9
144.1
17.8
Kazakhstan
126.5
74.0
126.0
52.0
Others
838.0
683.5
807.9
124.3
4,451.1
4,922.6
7,830.8
2,908.2
2,658.2
World total
U.S.
11.9%
1992
Asia total
(Share in world
total)
1,440.6
2,081.8
4,740.0
(32.4%)
(42.3%)
(60.5%)

Source: IEA3)
Figure 2-7. Coal Production (10 largest coal producing countries)
2.3 Trade
The ratio of coal trade (this study assumes trade as equal to exports) to global production
was limited to 16.0% in 2012, which is lower compared with other fossil fuels (Figure 2-8). But coal
trade has been expanding in line with an increase in demand for steam coal used mainly for power
generation. The trade ratio stands at 29.5% for coking coal, 16.2% for steam coal (including
anthracite) and 0.3% for lignite.
Coal producing countries are divided according to the production-export ratio into three
groups -- domestic consumption-oriented, export-oriented and intermediate countries. China and
India with respective small coal trade ratios of 0.3% and 0.2% are domestic consumption-oriented
countries, while Indonesia and Australia with respective high trade ratios of 86.4% and 71.7% are
export-oriented countries (Figure 2-9). In countries with high coal trade ratios, coal is positioned as
both an energy source for domestic consumption and a key export product.
936
929
963
857
894
932
717
789
696
709
820
40
30
609
569
535
689
763
725
678
667
481
478
432
558
551
525
554
369
368
348
457
504
323
299
254
449
520
498
281
253
289
20
290
283
282
212
236
217
202
207
191
186
182
195
187
179
184
197
194
195
195
203
186
202
401
295
50
10
210
400
197
193
367
195
179
175
192
364
363
183
167
330
180
172
287
152
145 130
167
289
286
147 128
275
200
149 128
400
144 119
600
506
800
624
1,000
60
Coal trade ratio (%)
Coal trade volume (million tons)
1,200
1,144
1,076
1,400
1,255
0
'80
'82
'84
'86
'88
'90
'92
'94
'96
'98
Coking coal
Brown coal
Ratio of trade to production (coking coal)
Ratio of trade to production (brown coal)
2000 2002 2004 2006 2008 2010 2012*

Steam coal
Ratio of trade to production (all coal)
Ratio of trade to production (steam coal)
Note: Data for 2012 are estimates. Exports are deemed to be trade volume, with anthracite included in steam coal.
Trade within the former Soviet Union before 1990 is not counted. The coal trade ratio is computed according to
the following equation: Coal trade ratio (%) = Coal export Coal production
Source: IEA3)
Figure 2-8. Trends in World Coal Trade

(Million tons)
4,000
3,500
3,549
10
0.3%
UpperProduction
MiddleExports
LowerCoal trade ratio (=Coal exports Coal production)
3,000
2,500
2,000
1,500
1,000
500
Export volume out of

production volume
935
114
12.2%
595
1.5
0.2%
443
421
354
383
302
86.4% 71.7% 134
37.9%
259
74
28.7%
197
0.4
0.2%
144
126
7.1
32
4.9% 25.3%
89
34
67
42
82
35
19
22
91.9% 52.3% 65.6% 45.3%
Source: IEA3)
Figure 2-9. Major Coal Producing Countries (top 10 countries) and Major Coal Exporting
Countries' Output and Exports (estimates for 2012)
8
Coal export trends

Coal exports in the world in 2012 totaled 1,255 million tons. Indonesia was the largest coal
exporter with exports at 383 million tons, followed by 302 million tons for Australia. The two
countries accounted for 54.5% of total exports in the world. Following Australia were Russia, the
United States, Colombia and South Africa. The six countries captured 86.7% of world total exports
(Figure 2-10).
Among major coal exporting countries, Australia was dominant until the first half of the
2000s. But Indonesia expanded coal exports remarkably from the early 2000s and replaced Australia
as the largest exporter in 2011 (Figure 2-11). Russia has steadily boosted coal exports since 1999.
The United States has increased coal exports since 2010 as domestic coal consumption has declined
due to a gas price fall amid a shale gas output expansion. China expanded exports sharply from 2000,
remaining the worlds second largest coal exporter between 2001 and 2003. Since 2004, however,
China has substantially reduced coal exports due to domestic demand growth. In 2012, China was
the 12th largest coal exporter with exports totaling 10.5 million tons (Figure 2-11).
Vietnam
Mongolia1.5%
1.8%
Kazakhstan
Others
2.5%
4.7%
Canada
2.8%
South Africa
5.9%
Others
21.5%
(Million tons)
1992
Indonesia
10.9%
World total
Vietnam
Colombia
0.9%
6.5%
(Outer
circle:
Kazakhstan
Estimates for 2012)
4.1%
667 million tons
Canada
4.0%
U.S.
for 2002)
South Africa
9.1%
10.4%
Colombia
Russia
5.5% U.S. 6.6%
5.4%
Russia
10.7%
Indonesia
30.5%
Australia
30.6%
Indonesia
15.4
73.0
382.6
309.6
Australia
126.2
204.3
301.5
97.2
Russia
43.4
44.3
134.2
89.9
U.S.
93.0
35.9
114.1
78.1
Colombia
14.6
36.5
82.2
45.7
South Africa
52.1
69.2
74.3
5.1
Canada
28.2
26.9
34.8
7.9
Kazakhstan
42.5
27.1
31.9
4.8
0.1
0.0
22.1
22.1
Mongolia
Vietnam
1.6
6.0
19.1
13.0
Others
80.6
143.7
58.6
85.1
497.7
667.0
1,255.3
588.3
283.9
World total
Australia
24.0%
2002
2012
2002-2012
estimates
growth
Asia total
(Share in world
total)
41.2
165.3
449.2
(8.3%)
(24.8%)
(35.8%)

Exports from Kazakhstan mostly go to Russia. Most of Mongolian exports are destined for China.
Source: IEA3)
Figure 2-10. Coal Exports (10 largest coal exporting countries)
(Million tons)
400
Indonesia
Australia
350
Russia
300
U.S.
Colombia
250
South Africa
200
Canada
Kazakhstan
150
Mongolia
100
Vietnam
North Korea
50
China
0
'80
'82
'84
'86
'88
'90
'92
'94
'96
'98
'00
'02
'04
'06
'08
'10
'12*

Source: IEA3)
Figure 2-11. 12 Largest Coal Exporting Countries Export Volume Trends
Coal import trends

The largest coal importer in the world in 2012 was China with imports totaling 289 million
tons (accounting for 22.6% of total imports) (Figure 2-12), followed by Japan's 184 million tons
(14.4%), India's 160 million tons (12.5%), South Korea's 126 million tons (9.8%) and Taiwan's 65
million tons (5.1%). The four major Asian coal importers accounted for 662.6 million tons or 51.9%
of world total coal imports.
Among major coal importing countries, Japan had remained the worlds largest importer
for a long time. But China, which has seen rapid domestic coal demand growth since around 2004,
boosted imports mainly for its Southeastern coast region far away from coal production sites from
2009 and replaced Japan as the largest coal importer in the world in 2011 (Figure 2-13). Meanwhile,
Japan reduced coal imports due to a recession in 2009 and due to the Great East Japan Earthquake in
2011. In India, domestic coal production growth has failed to catch up with domestic demand growth.
Indias domestic coal features high ash content and is usually mixed with imported coal for burning.
Furthermore, India has begun to operate thermal power plants fueled only by imported coal. As a
result, India has expanded coal imports rapidly since 2008. South Koreas coal imports have been
increasing as coal power generation and steelmaking capacity have been expanded.
10
(Million tons)
1992
Others
21.9%
China
22.6%
China
1.6%
Others
36.7%
Italy
1.9%
Turkey
2.2%
Russia
2.5%
U.K.
3.5%
China
1.6
11.3
288.8
Japan
110.6
161.3
183.8
22.5
6.5
23.3
159.6
136.4
South Korea
30.8
71.7
125.5
53.8
Taiwan
22.1
51.8
64.5
12.7
Germany
19.1
33.5
45.2
11.7
U.K.
20.3
28.7
44.8
16.1
Russia
39.7
20.9
31.4
10.5
Turkey
5.4
11.7
28.7
17.0
17.8
19.2
24.3
5.1
213.4
251.0
279.4
28.4
World total
487.4
684.3
1,276.0
591.8
Asia total
(Share in world
total)
189.8
348.8
896.4
547.5
(38.9%)
(51.0%)
(70.2%)
India
Japan
23.6%
World total
1,276 million tons
(Outer circle:
Estimates for 2012)
India
684.3 million tons
3.4%
for 2002)
South Korea
Italy Turkey
10.5%
Germany 2.8% 1.7%
U.K.
Taiwan
3.5%
7.6%
Russia 4.2%
Germany
Taiwan
3.0%
4.9%
5.1%
India
South Korea
12.5%
9.8%
Japan
14.4%
2002
2012
2002-2012
estimates
growth
Italy
Others
277.5

Source: IEA3)
Figure 2-12 Coal Imports (10 largest coal importing countries)
(Million tons)
300
China
Japan
250
India
South Korea
200
Taiwan
150
Germany
U.K.
100
Russia
Turkey
50
Italy
0
'80
'82
'84
'86
'88
'90
'92
'94
'96
'98
'00
'02
'04
'06
'08
'10

Source: IEA3)
Figure 2-13. 10 Largest Coal Importers Import Trends
11
'12*
Coal trade flows

The world coal market is divided into two markets -- the Asia-Pacific market and the
Europe-Atlantic market. While the Europe-Atlantic market has leveled off, the Asia-Pacific market
including China and India has been expanding. In 2012, the Asia-Pacific market was four times as
large as the Europe-Atlantic market.
Figure 2-14 indicates coal trade flows. Generally, Indonesia and Australia provide massive
coal for the Asia-Pacific market. Major suppliers for the Europe-Atlantic market are Colombia,
Russia and the United States. South Africa has been shifting from the Europe-Atlantic coal market to
the Asia-Pacific market due to growing Russian, Colombian and U.S. supply in the Europe-Atlantic
market and India's coal import expansion.
Figure 2-15 indicates steam coal trade flows and Figure 2-16 coking coal trade flows.
Since steam coal trade accounts for nearly 80% of total coal trade (Figure 2-8), the steam coal trade
flows are not so different from the overall coal trade flows. China is the largest importer of both
steam and coking coal, importing 218 million tons in steam coal and 71 million tons in coking coal
in 2012.
Other European
countries
53.4Mt
12.8Mt
Russia
134.2Mt
OECD
Europe
237.2Mt
4.6Mt
13.1Mt
41.0Mt
OECD
Europe
237.2Mt
China
10.5Mt
3.5Mt
9.9Mt
Africa/Middle
East
26.6Mt
333.8Mt
10.0Mt
Indonesia
382.5Mt
52.6Mt
18.2Mt
U.S.
114.0Mt
5.2Mt
35.2Mt
24.4Mt
115.4Mt
161.5Mt
9.7Mt
Colombia
82.2Mt
2.1Mt
3.8Mt
4.1Mt
11.2Mt
North America
25.4Mt
3.6Mt
Australia
301.5Mt
50.6Mt
50.8Mt
Japan
183.8Mt
7.3Mt
Other Asian
countries
729.8Mt
Canada
34.7Mt
8.0Mt
4.3Mt
17.4Mt
15.0Mt
4.1Mt
61.2Mt
7.8Mt
10.4Mt
5.9Mt
11.1Mt
Latin America
34.5Mt
South Africa
75.1Mt
Exporters
Importers
Note: The figure covers flows of more than 2 milllion tons. North America includes Mexico in accordance with a
definition in IEA3). Blue or red numbers indicate that the figure increased or decreased from the previous year,
respectively.
Source: IEA3)
Figure 2-14 World Coal Trade Flows (estimated for 2012)
12
Other European
countries
5.7Mt
Russia
115.9Mt
OECD
Europe
3.4Mt
186.6Mt
186.6Mt
Canada
11.2Mt
34.0Mt
58.0Mt
4.0Mt
China
29.6Mt
8.7Mt
5.2Mt
Other Asian
countries
2.8Mt
Japan
3.8Mt
2.4Mt
9.8Mt
OECD
Europe
41.3Mt
50.1Mt
North
America
131.6Mt
9.1Mt
24.1Mt
6.7Mt
U.S.
19.3Mt
50.6Mt
582.1Mt
7.7Mt
Africa/Middle
East
24.3Mt
333.8Mt
Colombia 5.9Mt
9.6Mt
86.8Mt
85.3Mt
81.7Mt
2.4Mt
3.4Mt
14.6Mt
10.0Mt
2.9Mt
11.0Mt
Indonesia
382.4Mt
Australia
52.6Mt
Latin
America
22.2Mt
159.2Mt
South Africa
73.6Mt
Note: Same as for Figure 2-14

Source: IEA3)
Figure 2-15 World Steam Coal Trade Flows (estimated for 2012)
Other
European
countries
12.0Mt
OECD
Europe
50.6Mt
7.1Mt
Russia
4.1Mt
18.3Mt
3.0Mt
1.9Mt
3.2Mt
OECD
Europe
Canada
China
1.7Mt
50.6Mt
2.1Mt
7.0Mt
15.0Mt
30.7Mt
5.2Mt
Japan
16.5Mt
52.2Mt
U.S.
4.5Mt
Other Asian
countries
63.4Mt
147.7Mt
11.2Mt
Africa/Middle
East
15.3Mt
28.7Mt
1.2Mt
1.0Mt
4.6Mt
7.9Mt
76.2Mt
North America
2.3Mt
21.0Mt
Indonesia
6.1Mt
0.0Mt
1.1Mt
South Africa
Australia
1.5Mt
142.4Mt
3.5Mt
Latin
America
12.3Mt

Source: IEA3)
Figure 2-16 World Coking Coal Trade Flows (estimated for 2012)
13
Colombia
0.5Mt
2.1Mt
3. Future Global Coal Supply/Demand Outlook

3.1 Estimation method and assumptions
Figure 3-1 indicates a framework for estimating coal supply/demand and trade flows for
this study. For forecasting industrial activities, energy prices and other social and economic
indicators that influence energy demand, we use a macroeconomic model that covers gross domestic
product, crude oil prices, materials output and other variables. Based on the forecast, we project coal
demand within an energy demand model. We divide coal into the three types of steam coal, coking
coal and lignite and take into account relevant indicators for these types in projecting demand. On
the other hand, we use various statistics and coal mine development projects for forecasting coal
supply. We project coal trade flows meeting supply and demand estimates by building and operating
a linear programming model.
Macroeconomic
model
(Major assumptions)
Various statistics,
development projects,
experts' knowledge, etc.
(Major assumptions)
GDP, crude oil prices,
exchange rates, population,
electricity source plans,
materials output, etc.
Energy demand model

(Relevant indicators)
Coal
supply
outlook
Coal
demand
outlook
Steam coal
Power generation,
industrial activities
Coking coal
Pig iron/coke output
Lignite
Power generation
Development projects,
capital conditions
Coal trade flow
Figure 3-1. Flow for Calculating Future Global Coal Supply/Demand
14
3.1.1 Coal supply/demand forecasts

We estimated future coal supply and demand while reflecting and reconsidering up-to-date
coal information, based on Asia/World Energy Outlook 20136) published in October 2013 by the
Institute of Energy Economics, Japan. Unlike the outlook, we estimated supply and demand each for
steam coal, coking coal and lignite. See the outlook for major assumptions for the macroeconomic
model and energy supply and demand forecasts other than coal.
3.1.2 Coal trade flow estimation

We built a linear programming (LP) model to develop coal trade flows that minimize coal
trade costs in the world while meeting projected coal supply and demand.
The LP model is a static model to divide the world into 26 countries and regions and
estimate coking and steam coal trade flows between regions (Figure 3-2). We treat coal trade costs as
an objective function and minimized them under a linear constraints system. We must note that the
LP model views the entire world as an agent and minimizes the total cost for computation. Attention
should be paid to the point that trade decisions based on partial optimization cannot be made in this
model.
Non-OECD Europe/Central Asia

OECD
Europe
Middle
East
Africa
South Africa
Other Africa
Russia
Other FSU Non-OECD Europe
North America
U.S.
Canada
Asia
JapanChina India
TaiwanSouth KoreaHong Kong
IndonesiaMalaysia
PhilippinesThailandVietnam
SingaporeBrunei
Other Asia
Oceania
Latin America
Colombia
Other Latin
America
Australia
New Zealand
Figure 3-2. Regions Subjected to LP Model

The total cost as the objective function consist of the coal terminal construction costs, the
coal production costs (represented by market prices) and the costs for transportation between
terminals.
15
We set the representative coal terminal construction cost at $915,000 per 10,000 tons
($1,830 million for a terminal with annual capacity at 20 million tons). For each country and region,
we computed the cost while taking into account the regional average price and wage levels along
with the representative cost. We assumed the same unit cost for steam coal and coking coal. We put
the payback period at 15 years.
As for the coal production cost (represented by market prices), we set the standard price
at $110/ton for coking coal and $80/ton for steam coal (2012 prices). For each country and region,
we computed the coal production cost while taking into account the regional average price and wage
levels along with the standard price. We used a steam coal price hike assumed for Asia/World
Energy Outlook 2013 to set the standard price for 2025 and 2040.
We used Worldscale7) to compute the cost of transportation between countries/regions.
Each country or region was represented by one terminal. We quoted distances between terminals
from Worldscale. But North America, Russia and other countries and regions where large distances
exist between eastern and western terminals were each represented by multiple terminals.
3.2 Results and discussion

3.2.1 Coal demand outlook
Coal demand will continue to increase in line with the economic growth of developing
countries. It will rise from 7,527 million tons in 2011 to 8,671 million tons in 2025 and 10,020
million tons in 2040. The annual average growth rate through 2040 will be 1.0% (Figure 3-3).
By coal type, steam coal demand growth will be overwhelming. The growth will be
attributable to growing electricity demand, as detailed later. Steam coal demand will expand from
5,677 million tons in 2011 to 6,723 million tons in 2025 and 8,095 million tons in 2040. In contrast,
coking coal demand, though rising from 936 million tons in 2011 to 1,035 million tons in 2020, will
turn down later in line with a drop in Chinas steel production. So far, Chinas crude steel production
has rapidly expanded in an overheated manner (Figure 3-4). But it may peak around 2020 and turn
down later. As a result, global coking coal demand in 2040 will slightly increase from 2011. This
means that steam coal will account for almost all of the 2,494 million ton increase in coal demand
from 2011 to 2040 (Figure 3-5 (a)).
Demand for coal for power generation will expand rapidly as electricity demand increases
in line with the economic growth in non-OECD countries including Asian countries. Power
generation coal demand will increase from 4,774 million tons in 2011 to 6,984 million tons in 2040
(with the annual average growth rate at 1.3%). Industrial coal demand will rise from 961 million tons
in 2011 to 1,139 million tons in 2040. Power generation and industrial coal demand will thus
account for 96% of the overall coal demand increase (Figure 3-5 (b)).
16
Million tons
12,000
Results
Forecasts
10,000
8,280
10,020
8,671
7,527
8,000
6,000
4,664
4,762
1990
2000
4,000
2,000
0
2011
2020
2025
2040
Sources: Past results are from IEA1), 2) , with forecasts based on the IEEJ outlook6).
Figure 3-3. Global Coal Demand
Million tons
1,000
Results
Forecasts
840
800
819
702
687
600
356
400
200
65
129
0
1990
2000
2005
2011
2020
2025
2040
Sources: Results are from the Iron & Steel Statistics Handbook8) , with forecasts based on the IEEJ outlook6).
Figure 3-4. Chinas Crude Steel Production
17
Coking coal 2%
Lignite 1%
Industrial use 7%
Steam coal
97%
Others 4%
Power generation
89%
(a). By coal type
(b). By use
Figure 3-5. Breakdown of Coal Demand Growth (2011-2040)

Region-by-region coal demand is given in Table 3-1.
In Asia where coal demand has expanded rapidly since 2000, demand will continue
increasing. Asian coal demand will rise from 4,810 million tons in 2011 to 5,974 million tons in
2025 and 7,273 million tons in 2040. Asias share of global demand will rise from 63.9% in 2011 to
72.6% in 2040. Among Asian countries, India and ASEAN members will continue boosting coal
demand. On the other hand, China will moderate coal demand growth after a rapid expansion during
the 2000s and reach a demand peak before 2040.
In North America and OECD Europe, coal demand will decrease as gas and renewable
energy power generation expands in response to environmental concerns including air pollution and
carbon dioxide emissions. North American coal demand will fall from 963 million tons in 2011 to
832 million tons in 2025 and 740 million tons in 2040. Its share of global demand will decline from
12.8% in 2011 to 7.7% in 2040. Coal demand in OECD Europe will drop from 793 million tons in
2011 to 687 million tons in 2040, with its share of global demand shrinking from 10.5% to 6.9%.
In non-OECD Europe (including former Soviet Union), coal demand plunged in the early
1990s before increasing again in line with an economic recovery from the late 1990s. While Russian
coal demand will decline from around 2025, power generation coal demand will increase in
Kazakhstan and some other countries. As a result, coal demand in the entire non-OECD Europe will
post firm growth through 2040.
In Africa and the Middle East as well, coal demand will expand with coal-fired thermal
power plants being constructed.
Regions shares of global coal demand growth indicate that Asia will account for almost all
of the global demand increase between 2011 and 2040 (Figure 3-6).
18
Table 3-1. Projected Coal Demand by Region

1980
World total
3,756
North America
687
U.S.
650
Latin America
19
Asia
913
China
626
India
108
Japan
88
South Korea
28
Middle East
2
OECD Europe 1,158
Non-OECD Europe
814
Russia
Kazakhstan
Africa
93
Oceania
69
1990
4,664
865
816
33
1,544
1,050
221
115
45
5
1,182
800
374
56
136
98
2000
4,762
1,029
966
44
2,077
1,338
357
153
72
13
831
467
230
31
170
130
2011
7,527
963
920
63
4,810
3,501
710
174
131
16
793
545
225
66
200
137
2020
8,280
859
815
96
5,597
3,928
963
168
139
23
743
587
236
81
232
143
2025
8,671
832
793
115
5,974
4,011
1,189
165
146
28
726
606
233
91
250
141
(Million tons)
Annual average growth (%)
2040
11/00 25/11 40/25 40/11
10,020
4.3%
1.0%
1.0%
1.0%
775
-0.6% -1.0% -0.5% -0.7%
740
-0.4% -1.1% -0.5% -0.7%
180
3.3%
4.5%
3.0%
3.7%
7,273
7.9%
1.6%
1.3%
1.4%
4,173
9.1%
1.0%
0.3%
0.6%
2,068
6.5%
3.7%
3.8%
3.8%
150
1.2% -0.4% -0.7% -0.5%
150
5.6%
0.8%
0.2%
0.5%
49
2.0%
3.9%
3.9%
3.9%
687
-0.4% -0.6% -0.4% -0.5%
625
1.4%
0.8%
0.2%
0.5%
213
-0.2%
0.3% -0.6% -0.2%
109
7.0%
2.4%
1.2%
1.8%
312
1.5%
1.6%
1.5%
1.6%
119
0.4%
0.2% -1.1% -0.5%
Sources: Past results are from IEA1), 2) , with forecasts based on the IEEJ outlook6).
(Million tons)
Asia
2,463
North America -188

Non-OECD Europe
OECD Europe
80
-106
Africa
113
Latin America
117
Oceania
-100
Middle East
33
World total
2,494
Figure 3-6. Coal Demand Increase by Region (2011-2040)
3.2.2 Coal production outlook

Major coal producing countries are planning to develop coal mines and transportation
infrastructure (shipment ports and railways). But actual production depends on demand (domestic
demand and international markets), with demand affecting progress in production plans. In
estimating production, therefore, we took into account domestic (or regional) demand and coal
industry conditions, and for coal exporting countries international market conditions (export
demand) and coal development plans.
19
Tables 3-2, 3-3 and 3-4 indicate region-by-region (country-by-country) coal production by
coal type. Future coal production trends in North America and OECD Europe will be far different
from those in Asia and non-OECD countries where coal demand will increase.
In North America, Canada will expand coal production as a coal exporting country. But the
United States will reduce coal production due mainly to a decline in domestic demand, an increase in
production costs and coal mining operations adverse effects on the environment. As a result, North
American coal production will decrease at an annual average rate of 0.6% from 2011 to 2040. Major
coal producing regions in the United States include Appalachia, the Powder River Basin and Illinois.
Production is expected to decline in Appalachia plagued with low productivity and to keep the
present level in the Power River Basin featuring higher productivity and lower costs. In OECD
Europe, coal production will fall at an annual average rate of 0.6% due primarily to a demand
decline, a production cost hike and the abolition of coal industry subsidies in several countries.
Unlike North America and OECD Europe where production will decline, Asian coal
producing countries will expand production in line with their own demand growth. Asian coal
production will rise at an annual average rate of 1.3% between 2011 and 2040.
Indonesia has substantially increased its coal production in response to the expansion of
the Asian market. Its production will steadily rise from 360 million tons in 2011 to 650 million tons
in 2040, with the annual average growth rate standing at 2.0%. But the Indonesian government has
adopted a policy to sustainably and efficiently use domestic coal resources for national interests,
adjusting the coal production expansion to domestic demand growth. As a result, Indonesias coal
exports will level off from around 2020 and begin to decline around 2025. India will boost its coal
production at an annual average rate of 3.7% from 2011 and 2040 in line with growing domestic
demand. Its coal output in 2040 will reach 1,633 million tons. But its domestic output may fall short
of covering all domestic demand. India will depend on imports to meet the domestic
production-demand gap. China is the worlds largest coal consumer, producer and importer. Chinas
coal output will increase through the mid-2030s to meet growing domestic demand and will later
decrease in line with a demand drop. Other Asian countries will expand coal output according to
their own demand growth. Among them, Mongolia will increase coal output in accordance with
exports to China.
Other non-OECD countries will expand coal production in response to domestic and
regional demand growth. In Africa, South Africas steam coal production and Mozambiques coking
coal output will increase in line with the expansion of the Asian coal market. (Mozambique will
boost steam coal output as well as coking coal production.) Colombia will boost steam coal output to
meet demand growth in other Latin American countries, although the European market as its largest
market will shrink, with U.S. imports decreasing.
20
Australias coal production in 2040 will more than double from 2011 to respond to the
expansion of the international coal market. Particularly, its steam coal output will more than triple
from 2011 due to a sharp market expansion.
Table 3-2. Projected Coal Production by Region

World total
North America
U.S.
Canada
Latin America
Colombia
Asia
China
India
Indonesia
Middle East
OECD Europe
Non-OECD Europe
Russia
Africa
South Africa
Oceania
Australia
1980
3,781
790
753
37
20
4
827
620
110
0
1
1,093
824
120
115
107
105
1990
4,624
1,002
934
68
48
21
1,325
995
219
10
1
1,045
813
372
182
175
207
205
2000
4,598
1,041
972
69
75
38
1,791
1,301
329
79
2
652
496
240
230
224
310
307
2011
7,452
1,060
992
67
122
86
4,373
3,280
575
360
1
581
649
322
258
253
407
402
2020
8,280
973
903
70
118
86
5,101
3,665
750
531
1
541
716
362
334
292
496
491
2025
8,671
954
886
69
126
90
5,401
3,733
929
559
1
525
739
363
364
311
560
555
(Million tons)
2040
10,020
896
824
72
155
112
6,402
3,900
1,633
647
492
764
348
442
373
869
863
11/00
4.5%
0.2%
0.2%
-0.3%
4.5%
7.6%
8.5%
8.8%
5.2%
14.7%
-0.5%
-1.0%
2.5%
2.7%
1.0%
1.1%
2.5%
2.5%

25/11
40/25
40/11
1.1%
1.0%
1.0%
-0.7%
-0.4%
-0.6%
-0.8%
-0.5%
-0.6%
0.2%
0.4%
0.3%
0.2%
1.4%
0.8%
0.3%
1.5%
0.9%
1.5%
1.1%
1.3%
0.9%
0.3%
0.6%
3.5%
3.8%
3.7%
3.2%
1.0%
2.0%
-1.6%
-0.2%
-0.9%
-0.7%
-0.4%
-0.6%
0.9%
0.2%
0.6%
0.9%
-0.3%
0.3%
2.5%
1.3%
1.9%
1.5%
1.2%
1.4%
2.3%
3.0%
2.6%
2.3%
3.0%
2.7%
Sources: Past results are from IEA3) , with forecasts based on the IEEJ outlook6).
Table 3-3. Projected Steam Coal Production by Region
World total
North America
U.S.
Canada
Latin America
Colombia
Asia
China
India
Indonesia
Middle East
OECD Europe
Non-OECD Europe
Russia
Africa
South Africa
Oceania
Australia
1980
2,258
609
592
17
7
3
719
552
87
0
0
365
416
108
105
33
32
1990
2,874
792
760
31
30
20
1,167
909
169
10
0
279
337
152
172
165
96
94
2000
3,254
869
840
30
58
36
1,597
1,178
283
79
0
161
204
102
226
221
138
136
2011
5,559
865
837
28
102
82
3,721
2,771
488
358
0
103
324
180
256
251
187
185
2020
6,331
785
757
29
106
82
4,409
3,114
639
525
0
91
368
197
308
290
264
262
2025
6,723
774
747
27
113
87
4,713
3,219
797
551
0
82
383
195
335
309
322
320
(Million tons)
2040
8,095
730
704
26
140
108
5,709
3,491
1,401
633
72
414
185
406
371
623
620
21
11/00
5.0%
0.0%
0.0%
-0.6%
5.2%
7.6%
8.0%
8.1%
5.1%
14.7%
-6.8%
-4.0%
4.3%
5.3%
1.1%
1.2%
2.8%
2.8%

25/11
40/25
40/11
1.4%
1.2%
1.3%
-0.8%
-0.4%
-0.6%
-0.8%
-0.4%
-0.6%
-0.3%
-0.2%
-0.2%
0.7%
1.5%
1.1%
0.4%
1.5%
1.0%
1.7%
1.3%
1.5%
1.1%
0.5%
0.8%
3.6%
3.8%
3.7%
3.1%
0.9%
2.0%
0.0%
0.0%
0.0%
-1.6%
-0.8%
-1.2%
1.2%
0.5%
0.9%
0.6%
-0.4%
0.1%
1.9%
1.3%
1.6%
1.5%
1.2%
1.4%
4.0%
4.5%
4.2%
4.0%
4.5%
4.3%
Table 3-4. Projected Coking Coal Production by Region
World total
North America
U.S.
Canada
Latin America
Colombia
Asia
China
India
Indonesia
Middle East
OECD Europe
Non-OECD Europe
Russia
Africa
South Africa
Oceania
Australia
1980
567
132
118
14
12
1
97
68
18
0
1
128
145
12
11
40
40
1990
610
121
93
28
16
2
124
86
36
0
1
93
180
85
10
9
65
65
2000
488
82
54
28
15
2
146
123
22
1
1
45
90
51
4
3
105
104
2011
982
111
82
29
18
4
578
509
44
3
1
25
98
65
2
2
149
147
2020
1,035
106
77
29
5
3
619
541
51
6
1
18
109
80
21
2
157
155
2025
1,027
103
72
30
6
3
601
514
59
8
1
14
115
86
24
2
164
162
(Million tons)
2040
976
94
60
34
534
409
86
14
126
98
30
181
179
11/00
6.6%
2.7%
3.8%
0.4%
2.0%
7.4%
13.3%
13.8%
6.5%
14.9%
0.0%
-5.1%
0.8%
2.3%
-4.9%
-5.9%
3.2%
3.2%

25/11
40/25
40/11
0.3%
-0.3%
0.0%
-0.5%
-0.6%
-0.6%
-0.9%
-1.2%
-1.0%
0.1%
0.8%
0.5%
-7.9%
1.1%
-3.4%
-1.0%
1.1%
0.1%
0.3%
-0.8%
-0.3%
0.1%
-1.5%
-0.8%
2.1%
2.5%
2.3%
7.9%
3.7%
5.7%
0.6%
-0.2%
0.2%
-4.3%
-9.7%
-7.1%
1.2%
0.6%
0.9%
2.0%
0.9%
1.4%
18.2%
1.5%
9.3%
1.1%
1.0%
1.0%
0.7%
0.7%
0.7%
0.7%
0.7%
0.7%
3.2.3 Coal trade flows

We used the LP model to estimate steam and coking coal trade flows in 2025 and 2040. In
forecasting trade flows, we took into account planned production deals and capital injection
conditions as well as projected coal demand and production.
Steam coal
Steam coal trade volume and flows are given in Tables 3-5 and 3-6 and Figures 3-7 and
3-8. Steam coal trade will expand from 857 million tons in 2011 to 1,108 million tons in 2025 and
1,417 million tons in 2040. For OECD Europe where steam coal demand will decline due to
environmental concerns and other issues, major coal exporters have so far included Russia,
Colombia, the United States and South Africa. Of them, Colombia will reduce coal exports to
Europe. This does not necessarily mean any relative decline in Colombias competitiveness in the
market for Europe. But this does indicate that Colombias exports to other Latin American countries
with growing coal demand would cost less than those to Europe. South Africa and Mozambique will
expand exports to other African countries, India and the Middle East where demand will increase.
While Russian coal exports will level off from 2025 to 2040, Russia will reduce exports to Europe
while expanding those to Asia.
In the Asian market, Indonesias exports will peak around 2025 and gradually decline later
due to its domestic demand growth and its policy of making effective use of coal resources. As a
result, Australia will greatly expand exports to meet growing Asian demand. Australias exports in
2025 will expand 1.5-fold from 2011. Those in 2040 will score a more than 2.5-fold increase from
2011. In fact, India and China have invested in new coal mine development projects in Australia and
will expand imports from mines subject to these projects.
22
Table 3-5. Steam Coal Trade (2025)

To
(Million tons)
North
Latin
America America
U.S.
5.3
OECD
Europe
2.4
From
5.0
40.3
Non-OECD
Europe
Japan
China
South Korea Other Asian

Taiw an
countries
India
30.9
0.6
3.1
1.2
2.1
0.3
1.4
5.0
32.8
0.7
1.5
1.0
81.3
Canada
Colombia
Africa
Middle
East
Russia
60.7
South Africa
13.6
Mozambique
5.5
10.2
7.2
14.5
20.2
0.6
13.0
3.0
1.8
0.8
14.2
39.7
0.1
7.0
1.9
Others
14.0
15.0
3.0
0.0
Other Asian countries
0.8
0.0
7.2
13.0
57.7
151.5
89.3
12.8
2.6
5.0
Australia
122.3
2.2
12.7
China
Indonesia
45.0
5.7
8.3
27.6
100.2
106.9
68.0
83.9
405.7
61.3
31.7
42.5
57.6
45.9
258.9
1.1
39.0
3.5
1.5
0.1
0.8
46.0
25.6
10.3
25.5
33.6
33.7
111.1
209.0
207.1
157.2
132.1
1,108
Note: Others includes Latin American countries other than Colombia, and non-OECD European countries other
than Russia. Other Asian countries on the export side includes Mongolia and Vietnam.
Non-OECD
Europe
33.6Mt
OECD Europe
7.2Mt
151.5Mt
Russia
122.3Mt
14.5Mt
20.2Mt
60.7Mt Other Asian
14.2Mt
OECD Europe
countries
5.5Mt
151.5Mt
46.0Mt
2.6Mt
5.0Mt
China
39.0Mt
8.3Mt
Middle East
3.5Mt
25.5Mt
China
14.0Mt
5.7Mt
209.0Mt
3.0Mt
3.0Mt
Africa
10.3Mt
India
10.2Mt
207.1Mt
12.7Mt
100.2Mt
106.9Mt
Mozambique
12.8Mt
83.9Mt
7.0Mt
2.2Mt
Other Asian
countries
132.1Mt
U.S.
3.1Mt
45.0Mt
32.8Mt
5.3Mt
South
Korea/Taiwan
157.2Mt
North
America
13.0Mt
5.0Mt
Colombia
40.3Mt
61.3Mt
81.3Mt
2.4Mt
57.6Mt
Latin
America
57.7Mt
42.5Mt
13.0Mt
South Africa
89.3Mt
Japan
111.1Mt
30.9Mt
5.0Mt
Indonesia
405.7Mt
39.7Mt
13.6Mt
27.6Mt
68.0Mt
Canada
2.1Mt
31.7Mt
Australia
15.0Mt
258.9Mt
45.9Mt
Note: The figure covers flows of more than 2 million tons. The legend in the figure is the same as in Figure 2-14.
Mexico is included in Latin America.
Figure 3-7. Steam Coal Trade Flows (2025)
23
Table 3-6. Steam Coal Trade (2040)

To
(Million tons)
North
Latin
America America
U.S.
4.8
OECD
Europe
9.9
Canada
From
Colombia
5.2
58.1
Middle
East
Africa
Non-OECD
Europe
Japan
China

Taiw an
countries
India
21.5
0.6
3.0
2.5
2.1
0.3
1.4
6.3
0.6
1.5
1.0
100.8
29.3
Russia
52.0
South Africa
10.0
Mozambique
5.0
10.8
12.2
15.7
0.1
1.7
8.8
12.5
22.2
0.6
13.0
2.8
0.8
17.7
44.3
7.0
Australia
5.0
40.0
19.0
10.1
108.0
137.8
8.5
84.7
98.4
58.3
90.3
365.2
59.5
51.8
196.1
58.8
150.0
569.2
0.9
32.5
3.3
1.4
104.6
209.0
354.9
152.1
0.8
Others
5.7
25.0
13.0
Other Asian countries
108.0
11.8
2.8
3.5
123.9
5.2
10.0
China
Indonesia
43.4
38.9
22.2
17.3
46.2
31.8
41.2
245.5
1,417
than Russia. Other Asian countries on the export side includes Mongolia and Vietnam.
Non-OECD
Europe
31.8Mt
OECD Europe
8.8Mt
137.8Mt
Russia
123.9Mt
52.0Mt
12.5Mt
22.2Mt
10.8Mt
OECD Europe
137.8Mt
Other Asian
countries
38.9Mt
5.0Mt
Middle East
46.2Mt
32.5Mt
3.5Mt
3.3Mt
5.0Mt
5.0Mt
Africa
India
108.0Mt
Japan
104.6Mt
China
25.0Mt
58.3Mt
South
Korea/Taiwan
North
America
152.1Mt
10.1Mt
59.5Mt
9.9Mt
Latin
America
108.0Mt
Australia
40.0Mt
569.2Mt
5.2Mt
Other Asian
countries
5.2Mt
59.6Mt
51.8Mt
150.0Mt
245.5Mt
Note: Same as for Figure 3-7.
Figure 3-8. Steam Coal Trade Flows (2040)
24
29.3Mt
4.8Mt
58.1Mt
Indonesia
365.2Mt
21.5Mt
U.S.
43.4Mt
3.0Mt
2.8Mt
5.7Mt
83.2Mt
98.4Mt
10.0Mt
44.3Mt
Mozambique
196.1Mt
11.8Mt
13.0Mt
90.3Mt
7.0Mt
South Africa
2.8Mt
8.5Mt
209.0Mt
12.2Mt 15.7Mt 354.9Mt

10.0Mt
China
13.0Mt
17.3Mt
Canada
6.3Mt
2.1Mt
17.7Mt
Colombia
100.8Mt
5.0Mt
Coking coal
Coking coal trade volume and flows are given in Tables 3-7 and 3-8 and Figures 3-9 and
3-10. Coking coal trade volume will increase from 283 million tons in 2011 to 325 million tons in
2025 and 357 million tons in 2040.
From 2011 to 2025, China and India will expand coking coal imports due to their growing
demand. In response, Russia, Mozambique and Australia will expand output. Russia and Australia
will increase coking coal exports to China, while Mozambique will expand those to India.
Mozambique, a new coking coal exporter, will export to Latin America (Brazil) and Japan as well as
India. Indonesia will develop coking coal in Central Kalimantan for exports to other Asian countries
including Japan.
From 2025 to 2040, China will reduce coking coal imports in line with a fall in demand.
But India will continue increasing imports. Given an increase in Mongolian exports to China and a
decline in Japanese demand, Australias exports to China and Japan will decrease. As a result,
Australias exports to India will expand remarkably.
Table 3-7. Coking Coal Trade (2025)

To
(Million tons)
North
Latin
America America
U.S.
3.6
Canada
1.0
Colombia
5.3
Africa
Middle
East
Non-OECD
Europe
Japan
China
India
5.0

Taiw an
countries
4.0
6.0
6.0
56.8
4.8
6.6
9.5
8.0
30.0
11.1
2.0
6.0
3.0
25.1
1.9
2.0
1.3
7.0
2.0
22.3
0.6
3.0
South Africa
0.3
Mozambique
3.0
Total
27.0
0.6
Russia
From
OECD
Europe
2.0
2.1
0.3
1.0
China
0.5
Indonesia
2.0
0.5
2.0
1.0
1.9
7.3
37.0
33.4
38.8
23.5
3.2
159.0
Australia
5.3
15.0
2.9
Mongolia
1.0
1.5
20.4
Others
20.4
1.5
4.6
14.3
51.8
5.2
1.0
14.5
1.5
54.1
77.0
52.8
44.5
5.1
324.8
than Russia.
25
Non-OECD
Europe
14.5Mt
11.1Mt
OECD Europe
51.8Mt
Russia
25.1Mt
4.8Mt
3.0Mt
Other Asian
countries
20.4Mt
OECD Europe
51.8Mt
3.0Mt
20.4Mt
15.0Mt
1.0Mt
5.0Mt
Africa
5.2Mt
Japan
1.5Mt
54.1Mt
India
52.8Mt
3.0Mt
South
Korea/Taiwan
44.5Mt
2.0Mt
38.8Mt
3.6Mt
North
America
4.6Mt
37.0Mt
Colombia
0.6Mt
5.3Mt
23.5Mt
Latin
America
33.4Mt
2.9Mt
3.0Mt
14.3Mt
Australia
159.0Mt
South Africa
0.3Mt
6.0Mt
Indonesia
7.3Mt
27.0Mt
U.S.
56.8Mt
4.5Mt
2.0Mt
2.0Mt
2.1Mt
7.0Mt
2.0Mt
Mozambique
22.3Mt
6.6Mt
6.0Mt
6.0Mt
2.0Mt
Canada
30.0Mt
9.5Mt
China
China
77.0Mt
Middle East
2.0Mt
2.0Mt
6.0Mt
Other Asian
countries
5.1Mt
5.3Mt
3.2Mt
Figure 3-9. Coking Coal Trade Flows (2025)
Table 3-8. Coking Coal Trade (2040)

To
(Million tons)
North
Latin
America America
Africa
Middle
East
Non-OECD
Europe
Japan
China
India

Taiw an
countries
U.S.
3.1
6.0
21.7
2.8
4.2
5.7
5.2
48.6
Canada
1.0
1.8
8.8
4.5
7.5
2.0
8.0
33.6
15.3
2.0
5.0
3.0
28.3
0.0
3.0
0.5
2.5
32.8
Colombia
0.4
Russia
From
OECD
Europe
0.4
3.0
South Africa
0.2
Mozambique
3.8
3.8
2.1
0.2
2.0
China
0.4
Indonesia
1.8
Australia
5.9
20.0
4.4
0.0
0.0
30.7
Mongolia
15.1
0.9
31.6
1.3
4.4
1.5
3.7
11.4
52.9
23.0
7.6
176.0
23.2
Others
0.5
4.1
18.4
23.2
0.6
57.3
6.8
2.0
16.0
1.1
45.2
72.0
80.0
44.1
11.3
356.9
than Russia.
26
Non-OECD
Europe
15.3Mt
15.9Mt
OECD Europe
57.3Mt
Russia
28.3Mt
8.8Mt
OECD Europe
Other Asian
countries
57.3Mt
23.2Mt
12.5Mt
3.0Mt
72.0Mt
2.0Mt
Africa
6.8Mt
3.0Mt
5.0Mt 2.0Mt
5.7Mt
2.5Mt
India
2.0Mt
2.1Mt
45.2Mt
1.3Mt
7.5Mt
80.0Mt
4.4Mt
15.1Mt
Mozambique
32.7Mt
11.4Mt
3.7Mt
South Africa
0.2Mt
8.0Mt
5.2Mt
Other Asian
countries
11.3Mt
U.S.
48.6Mt
3.1Mt
North
America
44.1Mt
4.1Mt
6.0Mt
30.7Mt
Colombia
0.4Mt
23.0Mt
52.9Mt
4.4Mt
3.8Mt
Indonesia
South
Korea/Taiwan
21.7Mt
4.5Mt
2.8Mt
China
Middle East
Canada
33.6Mt
Japan
China
23.2Mt
20.0Mt
3.8Mt
2.0Mt
5.0Mt
3.0Mt
Latin
America
31.6Mt
3.8Mt
18.4Mt
Australia
5.9Mt
176.0Mt
7.6Mt
Figure 3-10. Coking Coal Trade Flows (2040)
4. Conclusion
In this paper, we detailed past coal supply and demand results by coal type and by region
and forecast coal supply and demand through 2040. Furthermore, we built a coal trade model using
the linear programming method, forecasting coal trade flows in 2025 and 2040.
In contrast to growing concerns about climate change, global coal consumption has
continued expanding. Particularly from 2002 to 2012, global coal demand grew at a very high annual
average rate of 4.6% centering on steam coal for power generation, driven by Asia. This trend will
continue through 2040, with the demand growth center shifting from China to India. Many OECD
countries will reduce coal demand, while Chinas demand will peak out. As a result, global coal
demands annual average growth through 2040 will slow down to 1.0%. But power generation steam
coal demand will continue expanding. The coal demand increase projected through 2040 will rival
the rise in the decade between 2002 and 2012.
It will be difficult for most of countries to cover demand growth with domestic production
alone. As a result, international coal trade will expand. Total trade will grow by 65% between 2011
and 2040. Given that demand changes differ from region to region, future trade flows will be
27
different from the present ones. New major coal flows will emerge, including those from
Mozambique to India, from Russia to Asia, and from Colombia to other Latin American countries.
Meanwhile, Indonesia, now one of the major coal exporters, will refrain from expanding exports so
much due to domestic demand growth and its policy of protecting coal resources for their effective
use.
The coal trade model we have developed in this study separates steam coal from coking
coal and uses the linear programming method to estimate trade flows that can minimize the total
global trade cost. Therefore, we cannot take into account partial optimization for certain countries or
regions, or selection based on quality differences. Nevertheless, the model indicates a picture of
quantitative world coal trade while securing trade flows consistency with supply and demand. This
is one of this studys features.
Projected trade flows indicate that demand growth in China and India and policy shifts in
coal producing countries may bring about a decline in coal imports into Japan from Australia (steam
coal), Indonesia (coking coal) and other major traditional coal exporters for Japan as well as a
decline in these countries shares of total coal imports into Japan, while new exporters (including
Mozambique with coking coal) for Japan may emerge. We hope that this study will help trigger
efforts to reaffirm the potential strong impacts of other countries supply and demand trends on trade
flows for Japan and other importing countries, or to consider how best to secure stable coal supply
for the future.
Reference
1)
IEA, Energy Balances of OECD Countries 2013 (2013)
2)
IEA, Energy Balances of Non-OECD Countries 2013 (2013)
3)
IEA, Coal Information 2013" (2013)
4)
IEA, Energy Statistics of OECD countries 2013" (2013)
5)
IEA, Energy Statistics of Non-OECD countries 2013" (2013)
6)
Institute of Energy Economics, Japan, Asia/World Energy Outlook 2013 (2013)
7)
Worldscale Association, NEW WORLDWIDE TANKER NOMINAL FREIGHT SCALE

WORLDSCALE (2013)
8)
Japan Iron and Steel Federation, Iron & Steel Statistics Handbook
28
Contact: report@tky.ieej.or.jp

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