NMA forecasts continued gold bull market, record U.S. coal production
By: Dorothy Kosich
Posted: '30-JAN-07 08:00' GMT © Mineweb 1997-2006
RENO, NV (Mineweb.com) --In a survey for the National Mining Association, respected economist and mining policy expert Connie Holmes forecasts that U.S. coal production will set a record this year with gold continuing to enjoy its longest bull market in decades.
During a briefing Monday in Washington, D.C. with reporters, Holmes said that U.S. gold production will remain flat this year “with some small upside potential.” She noted that “this is the longest bull market since gold began to be traded on the world market in the early 1970s.”
“Price increases are being driven by deteriorating political conditions, political unrest, a relatively weak U.S. dollar and concerns regarding the long-term implications of the U.S. trade and budget deficits,” Holmes said. “Additional, demand for gold is outstripping production on a global basis, a situation that will not soon change as China is now legally allowing the sale of gold.”
Holmes also noted that analysts “expect 2007 to be a good year for global copper production” with refined copper output expected to increase by 3.8% this year.” For instance, the International Copper Study Group expects copper usage to be higher in all regions except in Western Europe. Meanwhile analysts believe the global refined copper market will be again in a modest surplus for 2007, “indicating that the demand for copper for inventory build will abate this year.”
While total refined U.S. copper production increased 6.6% in 2006, Holmes forecast that U.S. copper consumption “is expected to drop in 2007 due to the overall weakness in the U.S. economy, particularly in the housing market. Despite an expected decline in consumption, analysts are forecasting an increase in U.S. mined copper production of approximately 1%.”
In the meantime, Holmes disclosed that coal production is expected to set a record in 2007 for the third consecutive year. “Production is driven by the demand for affordable and reliable coal supplies that generate more than 50% of all the electricity that will be used in the United States this year,” she said.
This year, U.S. coal production is expected to total 1.17 billion tons, an increase over the 1.16 billion tons mined in 2006. Production in the West, including the Powder River Basin, is expected to be 685 million tons, a 2.4% increase over last year. Eastern coal production is anticipated to be 485 million tons, down from 491 million tons mined in 2006.
The 28 million tons added to coal consumer stockpiles in 2006 will be augmented by another 15-million ton inventory increase in 2007. “Although power plant inventories at the end of 2006 were higher than at any time since 1999, NMA believes that utilities will build inventories to even higher absolute tonnage levels over the next year to maintain the same level of daily supply and to insulate themselves against unforeseen logistical problems or higher than anticipated burn,” according to Holmes. “Thus, total supply in 2007 will again exceed actual use and export.”
Total U.S. coal exports are expected to decline by nearly 1 million tons or 1.2% to 48.5 million tons this year. Nevertheless, Holmes concluded that “the outlook for coal remains positive for 2007, despite our expectations for slower economic growth.”
Meanwhile, two new coal units are expected to begin producing electricity this year in Iowa and South Carolina. One nuclear plant Brown’s Ferry is expected to return to full operation in 2007.
Holmes predicted that coal production will increase by 45% or over 525 million tons over the next two decades with most of the new production going to electric generators. However, she asserted that more than 1 million tons of coal will go to new markets including coal gasification and coal to liquids.
“These headline figures underscore the undeniable importance of both coal and mineral mining to the U.S. economy and the continued vitality of our industry in a global market for energy and commodities,” NMA President and CEO Kraig Naasz said. “This trend also reminds us of the consequences that are likely to arise from arbitrary restrictions on the production of U.S. coal and minerals.”
AI
