When people think of energy investing, they usually first think of oil and the big dogs in the industry like ExxonMobil (NYSE: XOM) or BP Inc. (NYSE: BP). But what you may not know is that coal, though it may not be sexy, is one of the best energy investment vehicles in the world.
Total world coal production reached a record level of 7,678 million tonnes (Mt) in 2011, increasing by 6.6 percent over 2010. Since 1990, coal production has grown 64 percent from 4,677 Mt.
As you can see in this table, China is the number-one producer of coal in the world by a large margin. China produces more than three times its nearest competitor, the United States.
| Country | Annual Production (Million Tonnes) | Percent of World Total |
|---|---|---|
| China | 3,576 | 45.9 |
| United States | 1,004 | 12.9 |
| India | 586 | 7.5 |
| Australia | 414 | 5.3 |
| Indonesia | 376 | 4.8 |
| Russia | 334 | 4.3 |
| South Africa | 253 | 3.3 |
| Germany | 189 | 2.4 |
| Poland | 139 | 1.8 |
| Kazakhstan | 117 | 1.5 |
China is also the world’s largest consumer of coal. You can see the top ten coal-consuming countries in this table.
| Country | Consumption (Million Tonnes) |
|---|---|
| China | 3,753 |
| United States | 909 |
| India | 654.4 |
| Russia | 232.8 |
| Germany | 232.7 |
| South Africa | 182.7 |
| Japan | 174.9 |
| Poland | 152.9 |
| South Korea | 126.2 |
| Australia | 118.9 |
At current consumption rates, coal consumption is expected to rise about 50 percent through 2035 to more than 11,700 million tonnes. A true growth trend is happening in coal right now; it’s one of the most undervalued commodities in the world. But it won’t be that way for long. You could make a very solid case that coal will be one of the best-performing assets over the next ten years.