World coal shortfall to grow: Arch CEO

The world coal shortfall will last at least two or three years and could reach 70 million tons next year, Arch Coal Inc Chairman and CEO Steve Leer said Monday.

“In 2008, we estimate we’re 25 to 35 million tons short across the globe,” Leer told the Reuters Global Energy Summit in Houston. “We see that virtually doubling,” he added, explaining later he meant by the end of 2009. World production totals about 6 billion tons annually.
Leer said the shortfall has driven recent price increases, with benchmark U.S. coals doubling in the past year to more than $100 a ton, but he declined to predict how high prices might go.

He forecast a strong market for at least two or three years, saying it will take at least that long to ease rail and port bottlenecks in Australia and electric power shortages in South Africa, both key producing countries.

“Delays in infrastructure improvements probably would tend to support a longer time frame,” Leer said

Leer said he has been through several booms and busts in his 30 years in the oil and coal business but this one feels different to him.

“The world has never seen 2 billion people go through an industrial revolution, and we’re witnessing it right now. It is changing everything. It is certainly changing basic commodity demands and flows,” he said.

Reuters