Coal is the world’s most-used fossil fuel. It’s relatively abundant, with deposits found just about everywhere in the world, except the Middle East. But proven, recoverable reserves and coal production are fairly concentrated. Seventy-five percent of the world’s annual production comes from just the top five coal-producing nations. A decade ago, China produced about the same amount of coal as the United States, or about 1.25 billion short tons per year.
As you can see from the graph below, Chinese coal production more than tripled in the last decade, while U.S. coal production remained relatively flat.
China mined nearly half of the coal produced in the world in 2010. Its production was three times that of the United States, and nearly equaled that of the next 10 highest-producing nations combined. Over the last decade, China’s coal production increased 188 percent. While the top 10 coal producers remained relatively the same since 2000, there were some significant moves within the group.
Indonesia’s coal production over the last decade increased a whopping 368 percent. That moved it from tenth to fifth globally, bumping Russia to sixth place. Check out the pie chart below to see who the world’s largest coal producers are.
What happened to U.S. coal production in the last decade? It increased a measly one percent. That’s more a reflection of tightened environmental and greenhouse gas emission policies than it is of reserve or production limitations.
Fast Moving Coal Miners
When looking for booming miners, one company to keep on your watch list is PT Bumi Resources (OTC: PBMRY.PK). With a market capitalization of $4.49 billion, this Indonesian giant owns the KPC mine, the largest coal mine in the country, and the largest export coal mine in the world.
The KPC mine is so large it isn’t even fully explored yet. Its marketable, proven coal reserves total 2.9 billion tons, and its probable reserves are estimated at 10 billion tons. Clearly, there’s a huge potential for proven reserve growth.
Bumi’s coal operation is vertically integrated. It owns the mine, delivers and markets the coal, and is involved in mine contracting and mine infrastructure.
In addition to coal, Bumi also mines gold, iron ore, lead, zinc and copper. Bumi’s corporate roadmap is to become a diversified mining resource company. To that end, it recently diversified into oil and natural gas exploration. Bumi is ideally located to serve strategic mineral markets in Asia, Europe and South America.
Bumi’s coal production will nearly double over the next two years, and investors will reap the rewards. China’s insatiable demand, as well as demand from other emerging market countries, insures Bumi can sell all the coal they can produce.
The $5-billion giant is certainly one to consider. But if you really want to profit, you’ll want to do some more homework. The company is just one in a booming supply chain that will service the growing energy demands of Asia and Australia.