Thermal Coal Price Recovery Could Take Years

Australian Mining reported that Jean-Sébastien Jacques, Rio Tinto plc’s (ASX:RIO,LSE:RIO,NYSE:RIO) new coal boss, believes that it will take a long time for the market to see a recovery in the thermal coal price.

As quoted in the market news:

The depressed thermal coal market is currently trading at six-year lows of around $US63 a tonne, a far cry from the $US150 a tonne the commodity was fetching in 2011.

Jacques predicts it will be some years before a substantial price rise is seen.

‘In coal we have to be ready that we have multiple years, it could be even three or four years, before we see an inflection point,’ Jacques told The Australian Financial Review.

‘There will be volatility, don’t get me wrong; but where you say, ‘Well there is a real step change’ – that won’t be in the short term.’

Jacques said long-term demand for coal was still strong and that Australia ‘no doubt’ has a big role to play in supply.

‘There is no doubt that the world needs more energy, and big chunk of it will come from thermal coal. The big question is, where does Australia fit in this?’

However Jacques would not rule out the sale of any of its assets for the right price.

‘Is coal part of Rio Tinto today? The answer is yes, but any asset is for sale at any point in time. If somebody knocks on the door and makes a very good offer, we would have to look at it.’

Click here to read the full Australian Mining report.