That headline just seems incredible considering how much China already spends on generating power and especially the commodities such as copper and met coal. According to a research report by the China Electricity Council, China plans to spend $1.7 Trillion (yes Trillion) on power generation over the next 5 years versus the previous 5 years from 2006 to 2010.
Yes, thats a whopping 68% increase!
The expectation is that power generation capacity will rise 8.5% annually to 1.437 million megawatts by 2015. By 2015 only 33 percent of the power generation will be by non-fossil fuel and some 36% by 2020. So while the percent of non-fossil fuel will increase it appears that the fossil fuel (read coal) portion will continue to rise.
Will it ever end? Can China continue to grow at an enourmous clip? Well, until they eclipse the US in GDP, they likely can keep it up. With roughly 4x the population, China should have a bigger economy. This growth means that copper at $4.27/lb might be relatively cheap. At some point though, the high prices will subvert growth. Its clear that China expects this unstoppable growth to continue unabated as they continue to hunt for resources.
Its why Rio Tinto (RTP) has offered $3.9B for Riversdale Mining, a company that doesn't even produce any coal from its mines yet. And its also why a company with 13B mt of coal and expectations for the production of 5 to 10% of the worlds met coal should pass on the offer. Considering they expect to produce up to 20M mt of coal annually, that price sure seems cheap with China and India demand heating up.
At some point, the torrid growth in China will abate. It just doesn't appear that the next 5-10 years will be when that happens.