© Barlow Jonker Pty Ltd Commercial in Confidence 1

Thermal Coal Market

Presentation to UNECE Ad Hoc Group of Experts on Coal in Sustainable DevelopmentDecember 7, 2004

© Barlow Jonker Pty Ltd Commercial in Confidence 2

Presentation Outline

1. Barlow Jonker

2. Market Overview

3. Demand Forecast

4. Supply Forecast

5. Conclusions

© Barlow Jonker Pty Ltd Commercial in Confidence 3

Who / What is Barlow Jonker?

Private coal consultancy

Offices: Sydney, Brisbane, Johannesburg, Beijingaffiliates in : Jakarta, Bogotá, UK, USA, Canada

A unique & boutique group

Focus on international coal trade, & asset investment

Advising the industry for

over 25 years

Industry experienced staff –management, marketing, engineers, geologists, scientists, economists

Three key business elements

Coalportal.comNews, Information, Data

Research & Analysis Advisory Services- coal Market- asset investment- business strategy

Comprehensive Industry Database

>2000 Consumers >1000 coal mines > 500 projects

© Barlow Jonker Pty Ltd Commercial in Confidence 4

2. Market Overview

© Barlow Jonker Pty Ltd Commercial in Confidence 5

Coal Demand

Supply Demand Modeling

Generation Demand

Cement Demand

Other Industrial Demand

Economic Growth

InterfuelCompetition

Regulatory Framework

Cost of Supply

200 cement companies

85 countries

2000 power station units

Coal Supply

Mine Capacity

Infrastructure Capacity

35 countries

Over 500 mines

Resources & Reserves

Coal Quality/ Marketability

Political Environment

© Barlow Jonker Pty Ltd Commercial in Confidence 6

Global Coal Production 2003 – 5 Bt

© Barlow Jonker Pty Ltd Commercial in Confidence 7

2003 Thermal Trade – 481Mt

Principal Exporters

Principal Importers

3.7

8.9

11.5

64.7

4.575

33.317.2

50.577.7

17.51.7

5.3 993.7

Asia Pacific267 Mt

Atlantic214 Mt

5.8

0.5

© Barlow Jonker Pty Ltd Commercial in Confidence 8

Annex B EU Countries - Coal Use

Coal Use Change - 2003 Versus 1990

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Icelan

dNeth

erlan

dsPort

ugal

Spain Italy

Greece

Norway

Finlan

dSwed

enDen

markPola

ndAus

triaLu

xembo

urgGer

many

Irelan

dFran

ceBelg

ium

United

Kingdo

mSwitz

erlan

d

Total Thermal Coking

Increased Demand

Decreased Demand

© Barlow Jonker Pty Ltd Commercial in Confidence 9

Annex B Countries – CO2 Emissions

-60%

-40%

-20%

0%

20%

40%

60%

Portu

gal

Irela

ndSp

ain NZ

Gre

ece

Slov

enia

USA

Cro

atia

Aus

tralia

Italy

Japa

nA

ustri

aFi

nlan

dC

anad

aB

elgi

umFr

ance UK

Net

herla

nd EUSw

eden

Switz

erla

ndD

enm

ark

Icel

and

Hun

gary

Cze

ch R

epLu

xem

bour

Pola

ndG

erm

any

Slov

akia

Nor

way

Rus

sia

Esto

nia

Bul

garia

Rom

ania

Lith

uani

aU

krai

neLa

tvia

% of 1990 levels% of Kyoto Target

© Barlow Jonker Pty Ltd Commercial in Confidence 10

Thermal Coal Demand

© Barlow Jonker Pty Ltd Commercial in Confidence 11

Supply Demand Outlook - Global

Global Coal Demand Summary by Region

0

100

200

300

400

500

600

700

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mill

ion

Tonn

es

SthAmerica

NthAmerica

Mid East &Africa

OtherEurope

EU15

Pacific

Other Asia

North Asia

TotalSupply

© Barlow Jonker Pty Ltd Commercial in Confidence 12

Demand Outlook

Atlantic Imported Thermal Coal Demand Summary

-

50

100

150

200

250

300

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mill

ion

Tonn

es

Nth America

Sth America

Israel/Africa

Other Europe

Italy

UK

Spain

Germany

Netherlands

France

Denmark

Belgium/Lux

Portugal

Ireland

Finland

Sweden

Austria

Greece

Atlantic Total Supply

© Barlow Jonker Pty Ltd Commercial in Confidence 13

Demand Outlook

Pacific Imported Thermal Coal Demand Summary

-

50

100

150

200

250

300

350

400

450

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Mill

ion

Tonn

es

OtherThailandPhilippinesMalaysiaIndiaChinaHong KongTaiwanKoreaJapanPacific Total Supply

© Barlow Jonker Pty Ltd Commercial in Confidence 14

Thermal Coal Supply

© Barlow Jonker Pty Ltd Commercial in Confidence 15

Supply Outlook – Atlantic (1)

Atlantic Thermal Coal Export Supply

-

50

100

150

200

250

300

Mill

ion

Tonn

es

Norway 0.4 1.5 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0

Other Europe 1.7 3.9 4.2 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1 3.1

UK 0.6 0.5 0.5 0.6 0.6 0.5 0.5 0.5 0.5 0.5 0.4 0.4 0.4 0.4 0.4 0.4

Czech Republic 2.0 1.1 1.1 1.7 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5

Poland 16.9 19.7 19.6 18.6 18.0 16.5 14.0 12.0 10.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0

Russia West 20.1 21.9 26.1 26.3 27.5 31.0 29.0 29.0 28.0 28.0 28.0 28.0 28.0 28.0 28.0 28.0

Canada 1.4 0.8 0.9 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4 0.4

USA 17.9 17.5 14.9 18.7 19.2 14.0 13.8 13.1 13.1 13.1 14.7 14.5 14.3 14.1 13.8 13.6

Venezuela 6.5 6.3 5.6 5.9 6.2 6.7 6.7 6.7 6.7 6.7 6.7 7.7 7.7 8.9 9.8 10.4

Colombia 34.3 38.9 36.4 45.3 51.3 55.3 58.4 62.4 63.5 64.5 66.0 68.7 71.2 72.2 75.2 77.7

Other Africa - - - - - - - - - - - - - - - -

South Africa 64.6 61.1 67.8 69.8 65.2 66.4 67.1 70.7 74.0 74.0 76.3 78.3 80.3 80.3 80.3 80.3

Atlantic Demand 175.7 194.8 200.6 223.0 223.7 235.9 244.6 245.6 244.3 246.7 252.1 256.3 255.3 258.4 261.8 263.3

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Supply Shortfall

© Barlow Jonker Pty Ltd Commercial in Confidence 16

Supply Demand Outlook – Pacific (1)

Pacific Thermal Coal Export Supply

-

50

100

150

200

250

300

350

400

Mill

ion

Tonn

es

Other 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3

USA 3.9 2.3 1.4 0.2 - - - - - - - - - - - -

Canada 3.5 2.9 2.1 1.7 1.7 1.7 1.5 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8 1.8

Russia East 6.8 6.6 8.9 7.5 8.5 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0 9.0

Vietnam 1.2 2.6 3.9 4.4 9.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0

China 49.1 77.1 71.1 80.8 83.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0 80.0

Indonesia 53.4 62.7 70.1 85.7 97.8 110.2 114.1 117.7 116.4 117.3 118.4 121.4 123.6 126.1 126.6 126.6

New Zealand 0.2 0.3 0.2 0.5 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2

Australia 87.0 88.1 99.9 105.2 109.3 114.6 125.1 128.7 135.1 140.4 141.3 143.2 146.6 149.8 153.5 155.8

Pacific Demand 196.9 221.2 235.0 256.3 278.1 284.7 288.0 292.9 297.3 303.7 302.1 305.9 316.5 326.0 329.1 331.9

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Supply Surplus

`

© Barlow Jonker Pty Ltd Commercial in Confidence 17

Concluding Comments

• Thermal coal demand growth remains strong– Pacific greater than Atlantic

• Long term supply base– Short term infrastructure constraints – Will support supply growth for the future

• Atlantic market imbalance– Swing of USA from exporter to importer

• New project investment constraint– Focus on investment returns (production, infrastructure, consumer)– Uncertainty (regulatory, environmental, market)