“Wood Mackenzie’s analysis indicates a global shift in activity towards the US, overtaking Australia and Indonesia as a centre of coal M&A activity,” coal supply research head Gero Farruggio said.

“That is, aside from a divestment by big coal, which would override current trends.”

According to the company’s compiled data, the total number of M&A completed this year can be compared to the prior 12 months, but there is a 16% drop in disclosed acquisition spend from 2009 levels to $US10.9 billion.

Much of the recent M&A activity has centered on Australia and Indonesia, with 27 deals to date versus 25 last year. Single asset transactions made up most of that, with a 50% increase year-on-year to 25.

Meanwhile, Farruggio noted the US has continued to be a “global hotspot” for corporate M&A in coal. This year so far, total disclosed consolidation spend has been $2.3 billion, versus $4.2 billion in 2009, and all focusing on metallurgical coal resources.

While both the US and Asia have significant room for growth, “considerable” risks exist which could limit M&A movements.

“The biggest risk stems from uncertainties in the political and regulatory environment, which could greatly slow operations and investment,” Farruggio said.

He pointed out recent issues such as the inability to obtain US permits and the ongoing resource tax debate in Australia.

The international outlook for next year, however, is positive overall.

In the US, there are two main areas of opportunity for coal resource acquisitions, the first being further consolidation of thermal and met producers.

“Since the US coal supply sector is mature, this play provides the only real avenue for material domestic growth,” he said.

The second area of opportunity is the trend of overseas steel mills seeking to vertically integrate.

“In terms of deal value, this can exceed Australia and Indonesia where most of the activity will be at the asset level. The question here is in the future, will the largest producer of US metallurgical coal be a US company?”

The report suggests the existence of premium asset pricing may lead a player to exit the game, presenting a growth opportunity of scale for someone else.

“While these questions are yet to be answered, one thing is clear from our analysis: the US has the potential to become a hotbed of corporate activity, and lead a revival in coal M&A,” he said.

US exports to Europe will rise: BC

In related US operator news, one financial analysis firm said the nation is set to increase coal exports to European customers amid more competitive pricing and surplus levels of domestic natural gas.

According to Barclays Capital in a Tuesday report by Bloomberg, prices at South Africa’s Richards Bay Coal Terminal rose last week to the highest level since 2008, and three of five coal grades in the US tracked by government agencies remained unchanged over the past five weeks while two others fell.

“I would expect to see more US coal to Europe,” London-based analyst Amrita Sen said.

“Prices are better, gas supplies are worse in the US and European appetite has improved.”

She also noted a lack of product coming to Europe from Colombia and Russia. As a result, the country will turn to US product in next year’s first quarter and purchase more compared to the same period last year.

In 2009, the US exported 59.1 million short tons of coal worldwide, with 30.1Mt going to European end users.

According to industry group Euracoal via the Bloomberg report, the 27-member European Union imported 44.3 million metric tons of coal from all countries over this year’s first quarter. That was down from 51.5Mtpa earlier.

US exports will be limited by port capacity, Sen told the news service. The incentive exists in the shipment of coking coal, which will result in higher earnings for steelmaking versus the power-generating thermal counterpart.