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Asia's exploding economic growth churns Australia's coal industry

NEWCASTLE, Australia -- Asia's demand for coal usually spikes around Christmas, and there's ample evidence of that this year in this sunny port city some 4,000 nautical miles from China.

Ships were lined up in the mists offshore earlier this month for entry into the Port of Newcastle. Here, coal tankers the size of several American football fields nudge up to the docks, load up and head back to fire up East Asia's roaring economies. At Newcastle's terminals, and at other ports dotted along Australia's eastern coast, the story is the same.

Longer-term deals to supply China and India's needs for coal are under serious discussion, and Australia is lining up the infrastructure investments to handle it.

"It's fair to say demand is still strong, even though there's more coal coming on the market," said Paul Beale, general manager of the Newcastle Coal Infrastructure Group (NCIG). "You wouldn't say we're moving toward oversupply."

In late November and for much of December, Newcastle and other ports along the coast were hit with Australia's rainiest period in years. The severe weather has destroyed crop yields and shattered a decadelong drought that intensified the political debate about climate change.

Still, the boat-in and boat-out, 24-hour-a-day process of shipping coal to Japan, South Korea, China and India hasn't slowed much, even as flooding along the coast caused delays at mines in the states of New South Wales and Queensland.

Beale runs the third coal export terminal at the Port of Newcastle. It started operating in May, and already, an expansion is under way that will increase terminal capacity to 53 million metric tons of coal. Feasibility studies about expanding the export capacity further sit on boardroom tables at the six coal companies that together own the terminal.

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About This Report

Much of the world’s attention on how to deal with climate change is drawn to demands of environmental groups and deliberations in places like Washington and Copenhagen. But the outcomes of these debates are often shaped by the political and economic clout of “coal country,” the states and nations whose economies depend upon coal. “Coal country” is an occasional series that visits these states and nations where coal is on the economic or political agenda and shows through the stories of projects and people why this most problematic fossil fuel is not likely to be phased out anytime soon.

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