1. www.sghmartineau.com US COAL EXPORTS Andrew Whitehead SGH Martineau LLP London, Birmingham, Brussels

2. www.sghmartineau.com What I will cover…. US coal exports to: Europe India China including trends and prospects.

3. www.sghmartineau.com The United States Total US exports in 2011 c10% of production (up on 2000-2010 which averaged c5%): world’s 4 th largest exporter (2/3 of which met coal) http://www.eia.gov/todayinenergy/detail.cfm?id=3830 China & India Europe China & India

4. www.sghmartineau.com Europe

5. www.sghmartineau.com EU Coal Statistics

6. www.sghmartineau.com Prospects For Coal In The EU Thermal coal Coal accounts for c30% of power generation Short term expansion (nuclear and mine closures), but reducing to 15% by 2030? 2020 carbon reduction target 2020 renewables target Large Combustion Plant Directive – forced plant closures EU ETS – full auctioning of permits from 2013 Industrial Emissions Directive – removal of NOx from flue gases Conversion of coal plant to biomass: fuel supply a key constraint but US/Canada a major supply source! Carbon Capture and Storage (CCS) – funding for pilot projects UK policy – no new coal plant without CCS, and market support for CCS Overall - markets remain weak. Met coal Europe is destination for c50% US exports Demand affected by recession Steel production will recover, but difficult to predict when and with what vigour. Its re-emergence will be into a world of tight emissions controls and higher costs

7. www.sghmartineau.com India

8. www.sghmartineau.com Indian Coal Statistics

9. www.sghmartineau.com Prospects For Coal In India Thermal coal Coal accounts for c55% of power generation World’s 3 rd largest producer after China and US Inefficient production – reliant on imports Imports increasing – doubled since 2008 Reduction of carbon emission intensity by 20-25% by 2020 ‘India – Perform, Achieve and Trade System’ National Action Plan on Climate Change Met coal Long-term plan to expand steel industry Vast domestic resource, but quality is poor and supply cannot keep up with demand Imports predicted to more than double by 2015 Most imports come from Australia

10. www.sghmartineau.com China

11. www.sghmartineau.com Chinese Coal Statistics

12. www.sghmartineau.com Prospects For Coal In China Thermal coal Coal accounts for c71% of power generation World’s largest producer 12 th Five Year Plan: 17% reduction in carbon intensity by 2012 9.5% or more of energy from renewable sources by 2015 Costs of alternative energy sources falling (nuclear/wind/solar) National carbon trading scheme expected by 2016 Coal will remain dominant fuel source Domestic supplies often used as a hedge against high international prices Met coal Scarce domestic resource compared to thermal coal 2012: projected 10% increase in imports over 2011

13. www.sghmartineau.com Thank You Andrew Whitehead Senior Partner and Head of Energy and Climate Change T: + 44 (0)870 763 1528 M: + 44 (0)7831 160 753 E: andrew.whitehead@sghmartineau.com