Industry Trend Analysis - New Projects To Target Export Market - JAN 2016

BMI View : Canada's coal production will experience modest growth , supported by a strong export market and vast reserves. While persistently weak prices will subdue coal output growth over the short term, Canada's coal production growth will accelerate in the latter part of our forecast period to 2020.

Canada's coal mining sector will experience modest production growth due to rising Asian demand and a strong, albeit delayed, project pipeline. We expect the country's coal output to increase from 65.4 million tonnes (mnt) in 2016 to 72.8mnt by 2020, averaging 2.4% annual growth. In comparison, Canada's coal production declined by an annual average of 0.9% over 2011-2015, while the US, the world's second largest coal producer, will average a 1.3% contraction in coal output over 2016-2020. Although weak coal prices will continue to put pressure on miners' margins in Canada, resulting in project delays, we expect prices to begin to tick up after 2016. We forecast thermal coal prices to average USD59.0/tonne in 2016, climbing to USD65.0/tonne by 2019.

Asia To Dominate Export Market

Modest Growth Despite Headwinds
Canada - Coal Mine Production (mnt) & Growth (% y-o-y)
e/f = BMI estimate/forecast. Source: BMI, Energy Information Administration

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