By Stark
China’s appetite for coal won’t be affected by the availability of a Whatcom County shipping terminal, according to some industry analysts.
Gateway Pacific Terminal spokesman Craig Cole came up with a couple of reports to that effect, responding to yesterday’s post quoting economist Thomas Power, saying the opposite: As Power sees it, West Coast coal export terminals, at Cherry Point or elsewhere, will make coal cheaper in China and thereby encourage the Chinese to use more of it.
Cole countered with this report in Crosscut, in which author and attorney Daniel Jack Chasen cites some evidence that the only issue is where China will get its coal, not how much coal China will burn.
Chasen’s article dovetails, to some extent, with my earlier post highlighting reports by Richard Morse of Stanford University. Among other things, Morse says China is importing more coal mostly because it is the cheapest way to get that coal to China’s coastal cities–not because Chinese coal demand is outstripping domestic Chinese production. China’s problem, Morse says, is lack of rail capacity to get coal from mines to coast.
If China can fix that problem, or if the price of imported coal on world markets rises too high, China’s supposedly “insatiable appetite” for imported coal could go away as quickly as it materialized.
Morse is also quoted in this report from the Minegolia site, apparently originating in the Trading Markets newsletter, stating: “By importing U.S. coal, China is not changing the amount of coal that it burns. I understand why on an emotional level people don’t like it. But if you actually understand the economics, and you understand how climate change works, it’s a non-issue.”
This whole article is well worth a read. It notes that Peabody Energy (stock symbol BTU) is already a major player in international coal shipments, and will ship a lot of coal to China from a variety of origins no matter what happens in Whatcom County.
“The company has already plunged $2 billion into Australian mining operations to supply Asia and has a coal trading business with offices in Beijing, Singapore, London and Jakarta, Indonesia. It is studying joint ventures in Mongolia and China, discussing long-term supply agreements with India’s state-owned coal company and pursuing projects and partners in Indonesia.”
The report also makes it clear that blocking new coal ports in Whatcom County, and elsewhere along the West Coast, is a high priority for the Sierra Club and other environmental groups.
““We plan, with the strong Democratic states of California, Oregon and Washington, to put up a wall to (coal export terminal) efforts,” said Bruce Nilles, who heads the Sierra Club’s Beyond Coal campaign in Washington.
This is the kind of issue where both sides are going to have plenty of expert analysis all photocopied and ready for handout. But maybe the question of Chinese coal-burning behavior is simpler than it sounds. Maybe it’s not an either-or situation.
It seems obvious that China is going to burn a lot of coal no matter what happens in Whatcom County. It also seems obvious that they would burn Rocky Mountain coal, shipped out of Gateway Pacific Terminal, as long as it makes economic sense for them to do so, and not one minute longer.
If the Whatcom County terminal ever reaches maximum envisioned capacity of around 50 million tons per year, it seems doubtful that this would mean a net increase of 50 million tons burned in China. But if that terminal does enable China to acquire coal more cheaply than would otherwise be the case, doesn’t that stimulate Chinese use of coal to some extent? When fuel is cheap, investments in fuel efficiency are less likely to pencil out, as are alternative energy sources.
It ain’t just China who will be having energy needs in the future.
IMHO in a global market to be competitive, energy cost are as much a factor as labor and materials cost.
But no one can guarantee that if this terminal gets built, what if anything will be shipping from it or to who, 10 years down the road. But who can guarantee for sure what if anything or who any business will be doing business with, ten years down the road?
AFY!!theheelotsheepdog!!!
Global warming and coal is not the issue with the terminal. The issue is that there is NO benefit to Whatcom County from the coal and a lot of negatives.
The Chinese trade representative told the people at that grain growers conference that the China would not be a long term market for the sub-bituminous coal from the Whatcom County terminal, but that they would be interested in grain and soy beans.
So, why build the coal terminal at all? What is the benefit to Whatcom County from this coal terminal? It’s not jobs because, as Craig Cole has reminded us so often, the terminal will be run by computerized robotics and conveyor belts. There will be few workers actually on site in Cherry Point. It’s not tax revenue because the WA state growth management act dictates that the money will mostly go to the state general fund. So why do it?
Kelli Linville had the best reason for not shipping coal from Whatcom County, selling off our natural resources to Asia is not good for the country. It puts the US in the category of third world countries who sell off their natural resources because they have nothing else to offer.
I got a laugh out of the email that went around, defending the coal terminal, saying that we should fight the use of coal here in the US, but sell it to anyone else who would buy it.
Why would we do that? There is no money in the sub-bituminous coal, anyway. It sells for $80-$85/ 5000 tons. The only profit is in the terminalling. Sub-bituminous coal is on the same level as pet coke and there is so much of that being produced in the world, that they can’t give it away.
Can’t say I’m really interested in sucking on coal dust so that China can have cheap electricity.
Chinese planners (the darlings of Tom Friedman) have ignored the increased demand for freight traffic infrastructure so that they could focus on investments in (now pretty much underutilized because the market can’t afford the lofty fares) high speed passenger rail.
The result is that much coal in China is transported by truck on congested freeways. This is a very inefficient mode of transport, obviously.
That planning problem will likely be resolved, but China’s demand for coal will not.
If you don’t like shipping it, we could always burn it here. It’s the same global atmosphere, after all, and the government here imposes more stringent emission mandates, more than likely.
John Galt,
Why does your opinion matter?
This is a very large investment by a large corporation capable of making that investment. They own the property. That enterprise will conform to all environmental regulations that govern the enterprise, and if it doesn’t produce a single job, what business is it of yours?
What do they do with the robots when they are so corroded with coal dust that they aren’t functional anymore? Can they be recycled with that many contaminents? Will they just be dumped in Recomp somewhere? Are we stuck with that waste locally? Has Craig Cole explained what happens to them? Inquiring minds really do want to know. “Curiouser and curiouser, said Alice.”
John Galt Says:
It sells for $80-$85/ 5000 tons.
CORRECTION. It goes for about $80-85/TONNE (thats per metric tonne about 10% more than a standard US ton) with a MINIMUM order of 5000 tonnes. However, some of the coal from the Powder RIver Basin is higher grade and sells for more.
http://www.alibaba.com/showroom/sub–bituminous-coal.html
Perhaps, if the USA had not driven som many companies and jobs from the USA we would not have to act like a third world country and export our natural resources such as coal and timber.
And those of you that think we need to tax US corporations more.. take note:
The world’s superpower is about to lead the way in yet another realm. Next month, America is set to bear the distinction of having the highest corporate tax rate in the industrialized world.
According to a study by the Tax Foundation, America’s combined federal and state rate of 39.2 percent is only out paced by Japan’s rate of 39.5 percent – which Japan plans to lower next month. Without Japan in the lead, America’s 39.2 percent will render it the corporate tax rate leader in the developed world, aka the countries comprising the Organization for Economic Cooperation and Development (OECD).
Read more: http://dailycaller.com/2011/03/16/america-to-have-the-highest-corporate-tax-rate-in-april/#ixzz1So8suPvG
John Galt: So….um, why did you call this a coal terminal. It will ship whatever is needed. It’s only the whiners that are calling it a coal terminal because they believe (rightly) that that commodity will be the biggest item to pass through it. But since when did that mean that it would lie vacant if no coal was being shipped. Odd reasoning: Terminal would transport coal to china = Bad. Terminal would NOT ship coal to China = Bad? So….tell me what you want? Oh yeah, no business of any kind.
LaMarTEK:
Re Taxes…I just wish conservatives would be more clear on the difference between exemptions/loopholes and rates. Closing loopholes is not “raising taxes” IMHO. Loopholes are bought and paid for by pretty much anyone with Fortune 500 status. Close them, but then lower the rate and you will find only a minority of them complaining. They will then pay slightly more they do now, less on lobbying, and mid-size biz (who always pay) will start hiring with the new capital.