Demand for coal may outstrip oil 

 COAL consumption is growing around the world at increasing rates despite widespread concern over greenhouse gas emissions and is set to overtake oil as the world’s top fuel.

That’s the message from a new 148-page report from the International Energy Agency, titled Market Trends and Projections to 2017.

The report shows Australia – which effectively means the Hunter and Gunnedah basins and the Queensland coal fields – will retain its place as a major world producer.

Indonesia has overtaken Australia as the biggest seaborne exporter of coal, but when the energy content is taken into account –  Indonesian coals have less energy than Australian – Australia remains the market leader.

The report examines the big increases in costs that have plagued Australian mines in the past three years, but finds that most of the cost increases are caused by the strong Australian dollar, rather than problems with productivity.

The report said typical Hunter Valley coal production costs rose by 30per cent between 2009 and 2011.

Labor costs rose by 9per cent but the Australian dollar rose by 25per cent, cutting returns to Australian mines because coal is sold internationally in US dollars.

A spokesman for the Construction, Forestry, Mining and Energy Union said the report refuted, rather than supported, industry concerns of ‘‘a disaster in progress’’ on mining costs.

However, Australian Coal Association chief executive Nikki Williams said reducing costs was the industry’s number one priority.

‘‘Any suggestion that solid international demand will secure Australia’s place in the sun is profoundly misguided,’’ Dr Williams said.

The executive director of the energy agency, Maria van der Hoeven, said coal was particularly affected by the global climate change agenda, which had been marked by ‘‘disappointing inaction’’.

Despite predictions that coal consumption would slow, global demand rose by 4.3per cent in 2011 to total nearly 7.4billion tonnes. 

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