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Arch Coal and Peabody seek coal exporting deals to Asia
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Tuesday, 28 Dec 2010

From atop the 25 story coal silo overlooking Arch Coal Inc's Black Thunder mine in northeast Wyoming, a seemingly endless string of rail cars stretches into the horizon.

More than 20 trains arrive a day, each a mile and a half long. One by one, they snake around a loop where more than 120 hopper cars are topped off with dusty, black rock.

Almost every bit of coal that leaves is headed east, where the vast majority of the nation's 1,000 plus fiery coal boilers await their next feeding. But trains could soon start heading west to dump their cargo on ships headed to the Far East. Miners here in the coal-rich Powder River Basin, the self-proclaimed energy capital of America, have plans to tap the Mother of All Energy Users: China.

China will triple its electricity use by 2035, with coal remaining the dominant fuel, according to a forecast last month by the Paris-based International Energy Agency. The fastest growth will happen during the next five years, as millions of Chinese migrate from the countryside to cities and electricity use per capita continues to rise.

For Peabody Energy Corp. and Arch the nation's two largest coal producers, both headquartered in the St. Louis region the rising tide of Asian coal demand couldn't be better timed. China and India are shopping the globe for new fuel supplies just as legal challenges and fears about climate change are jeopardizing demand at home.

For environmentalists, scientists and policymakers worried about the environmental and social cost of coal emissions, the timing couldn't be worse. To them, sending coal to Asia just means exporting American pollution and climate destruction. Global warming being global, burning coal overseas would have the same impact on rising temperatures and sea levels in the U.S. as burning it here.

Mr Bruce Nilles who heads the Sierra Club's Beyond Coal campaign in Washington said that "We plan, with the strong Democratic states of California, Oregon and Washington, to put up a wall to (those) efforts.”

Others counter that exporting coal would have no impact on the amount burned, only on who produces it. China has ample coal reserves; it would only import coal if it can buy at prices lower than producing and shipping it at home.

Mr Richard Morse director of research on coal and carbon markets at Stanford University said that "By importing US coal, China is not changing the amount of coal that it burns. I understand why on an emotional level people don't like it. But if you actually understand the economics, and you understand how climate change works, it's a non issue."

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