Company president Richard Navarre told Reuters during this week’s Coaltrans conference in Bali that Peabody expected the coking coal market’s recovery in the second half of this year to be patchy and, while primarily led by China, he did not see anyone else through the balance of the year that could serve as a significant price catalyst.
"The thermal coal market is going to see significant growth and if you're going to be in the export market, it’s something that you have to be interested in," he told the news service.
Navarre noted the Asia-Pacific region was becoming more significant to the business, as the share of earnings before interest, depreciation and amortisation from interests outside the US spiked over 50% last year, versus 1% in 2003 – a feat fortified by Peabody’s Australian holdings.
While he did not identify specific companies, Navarre told Reuters that coal quality and a country’s regulatory atmosphere would be key factors in Peabody’s investment choices.
In Indonesia in particular, the country’s new mining policies were having an impact on discussions. "The lack of clarity is certainly making it difficult to make a confident investment decision," he said.
Navarre told Reuters he expected the Pacific thermal market would remain stable through the balance of the year.
He also speculated on import futures, highlighting China with an expected 10-20 million tonne net of imports in 2009 thanks to higher domestic prices.
India, meanwhile, was forecasted to be the strongest coal importer in the region by 2013, with expected shipments of 80-100Mt annually.
Earlier this month, it was announced that Peabody and Xstrata planned to bid for a controlling stake in Indonesia’s PT Berau Coal in a deal valued at around $US1 billion.
Also reported by Reuters, an unnamed source said both Peabody and Xstrata were seeking to purchase the controlling stake of investment company Armadian Tritunggal.
Armadian currently owns 51% of Berau Coal, which holds three surface mines in the Berau area of East Kalimantan with a total production capacity targeting 15Mt of thermal coal this year.
Both Xstrata and Peabody did not provide any comment to the news service, which quoted another source as saying Berau Coal could fetch $US1.5 billion if Armadian’s sale triggered the company’s other shareholders, Rognar Holding (39%) and Sojitz Corporation (10%), to sell their stakes.
Reuters said on Monday that Peabody might also be in talks to purchase a stake in Indonesia’s second-largest producer, Adaro Energy.
