Coal consumption in China is likely to dwindle rapidly, writes Alex Kirby, leaving its own mining sector and foreign coal exporters in serious trouble. Australia and Indonesia are at greatest risk as China may soon stop importing any coal at all. Investors need to dispel any belief that Chinese coal demand is insatiable, and integrate this transition into their decision-making. Analysts believe that China - the world's largest producer and consumer of coal, accounting for almost half of global consumption - could be close to making an abrupt, drastic change of track.
Coal consumption in China is likely to dwindle rapidly, writes Alex Kirby, leaving its own mining sector and foreign coal exporters in serious trouble. Australia and Indonesia are at greatest risk as China may soon stop importing any coal at all.
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Investors need to dispel any belief that Chinese coal demand is insatiable, and integrate this transition into their decision-making.
Analysts believe that China - the world's largest producer and consumer of coal, accounting for almost half of global consumption - could be close to making an abrupt, drastic change of track.
The view is set out in a report by the Carbon Tracker Initiative and the Association for Sustainable and Responsible Investment in Asia (ASrIA).
It says that when China's demand for thermal coal (cheap coal burned in power stations to generate electricity) peaks, this will leave up to 40% of its coal-fired power generation capacity potentially useless - and that could be in barely five years' time.
Thermal coal currently provides just under 80% of China's power, the report says, with up to US$21 billion spent annually on the sector's assets.
Image of coal barge in Shanghai via Shutterstock.
Read more at ENN Affiliate, The Ecologist.
