* Miner cites demand uncertainties linked to climate change
* CEO expects weaker coal prices next year
By Barbara Lewis
LONDON, Nov 24 Australia's South32, the
mining company spun off from BHP Billiton, in
2015, will avoid buying thermal coal because of uncertainties
over demand linked to climate concerns, the company said on
Forecasters such as the International Energy Agency have
predicted that coal demand will peak by the middle of the next
decade. But some analysts and miners question whether demand
will peak as quickly as supply, which could push up prices.
South32 announced this month that it would pay $200 million
to acquire Peabody Energy's Metropolitan
metallurgical mine in Australia, which produces coking coal used
to make steel.
Chief Executive Graham Kerr said the company would make
further acquisitions if they created value but would avoid
"Metallurgical (coking) coal is attractive long term," he
said in a conference call with journalists. "Because of
uncertainty around carbon prices, because of uncertainties
around climate change, we're not going to buy or develop new
energy (thermal) coal."
Prices for thermal coal, used for energy generation, have
risen by about 100 percent this year while coking coal has
surged by more than 200 percent because of Chinese demand and
The world's biggest shipper of seaborne coal, Glencore
, has said that coal continues to offer an investment
South32's Kerr said that the price strength could continue a
little longer, but he expects the market to weaken in 2017 for
both coal types.
Negotiations on the Peabody purchase began before the price
surge, though the deal included a mechanism to share out price
gains between buyer and seller in the event of a strong coal
Peabody, the biggest U.S. coal miner, filed for bankruptcy
protection in April after a sharp drop in coal prices left it
unable to service its $10.1 billion of debt, much of it incurred
for expansion in Australia.
It said on Wednesday that it is closer to exiting bankruptcy
after this year's price increases.
(Additional reporting by Rahul B in Bengaluru; Editing by David