BHP Billiton (BHP) is playing the long game on coal but there may be reason to be skeptical about demand -- even in emerging economies such as India and China -- due to greater environmental pressures and the increasing viability of natural gas.
"Against the backdrop of greater uncertainty in the outlook for thermal coal, we are confident that base demand in emerging economies will remain resilient for decades to come and our higher quality coals position us well in an increasingly carbon constrained world," Mike Henry, BHP's President Operations Minerals Australia, said in a statement released Tuesday.
The bullish sentiment on coal was similar to comments made by Chief Commercial Officer Dean Dalla Vale in April 2014.
"Coal is expected to remain the centerpiece of Asia's energy portfolio into the foreseeable future, where coal is the cheapest and most readily available source of energy," Dalla Valle said in a speech that was reported in The Wall Street Journal. In the same speech, Dalla Valle said India is "anticipated to be the most significant source of new demand."
According to BHP's 2015 annual report, coal accounted for 13% of its annual revenue.
Since Dalla Vale's comments, shares of BHP are down 60% amid the broader decline across commodities and the weakening of the China growth story. Real Money chartist Bruce Kamich documented BHP's decline on Tuesday.
Representatives for BHP Billiton did not immediately respond to requests to comment.
Demand for coal may exist for "decades," but it may not make sense to characterize it as "resilient," given the headwinds the commodity faces even in the developing world.
"Experts think they might reach peak demand around 2020, but when more than half of China's installed capacity is coal, they are too reliant to move to renewables anytime soon. Same goes for rest of the world basically," Real Money Pro contributor Ben Cross said in an email Wednesday.
Fellow Real Money Pro contributor Jim Collins also sounded cautious tones about the long-term growth of coal as the entrance of renewables may be slow, but may also become increasingly viable.
"I think in the U.S. the shift away from coal -- especially to natgas -- is a permanent one," Collins said in an email Tuesday. "China will always be a swing importer as the move to renewables will be slow there. India is in a similar situation."
Although India has been picked as the next emerging economy hotspot, the country has also stated its intent to be less reliant on imported coal and it has also shown interest in importing natural gas and using renewable energy sources, according to a 2015 report by the Institute for Energy Economics and Financial Analysis. Progress on those targets has been mixed for India but the stated intention to be self-sufficient does not bode well for BHP's coal plans in the developing world.