Toiling at the global coalface from the heart of the City of London

WILDGEESE - EMIGRANT BUSINESS LEADERS ON OPPORTUNITIES ABROAD: Eoghan Cunningham, Coal broker, London

BROUGHT ON up on a farm in Dunboyne, Co Meath, Eoghan Cunningham today heads up Global Coal in the City of London, which provides the market place for the sale of hundreds of millions of tonnes of coal annually.

For many, the focus in 2010 is on renewable energies or nuclear power as the world frets about energy security with the rise of the East and the early chapters, perhaps, of the end of oil’s dominance. For Cunningham, however, the future remains coal.

“It’s funny in this part of the world – when you talk about coal, everyone thinks it is dying out. Over the past decade, it has been the world’s fastest-growing energy source, mainly due to China and India.”

Today, coal provides one-third of all energy needs: “Oil is about 40 per cent, coal would be second and natural gas would be the next. But coal is increasing at a faster pace than all others to the point where it could overtake oil,” he says. “China this year alone will increase consumption by 400 million tonnes on top of the 300 million tonnes they were already burning.”

Cunningham has been chief executive of Global Coal for the last five years. His firm does not set prices. Rather, it sets down the standards by which different types of coal are judged by traders and energy companies.

“Coal will have different chemical and physical attributes. When you put it into a power station, it will burn differently depending on what type of power station it is and what type of a boiler. With tightening environmental restrictions, power station engineers are very concerned about emissions.”

Looking around his glass-walled offices, he goes on: “All the terms and conditions are already agreed. The only thing that is on the screen is price and volume. A handful of contracts go through here each day, but each of them is for a bulk-carrier cargo of 75,000 tonnes or 150,000 tonnes.”

Educated in Belvedere College in Dublin, Cunningham moved to the United States after a maths and economics degree in University College Dublin, before living in Rome for five years where he did an MSc in Boston University’s campus there.

The family had moved to the Italian capital after his father, Patrick – now chief scientific adviser to the Government – took up a posting with the United Nations’ Food and Agriculture Organisation.

“I went down there for a visit and ended up staying for five years. That gave me a nice broad perspective on life outside of Ireland, which was very useful and I learnt another language,” says Cunningham, who later moved back to Dublin to work for an oil trader before leaving again for Amsterdam.

In 1997, he moved once more, this time to join London Electricity – now part of EDF – where he ended up running the company’s trading operation, purchasing electricity and gas supplies for its five million customers in the city.

The market has changed since his 2005 move to Global Coal, following the entry of merchant banks. “Traditionally, you had annual negotiations. You would buy from the same guy every year.

“The seller wanted to sell when the price was high and the buyer when it was low. So each side was juggling for time and position and waiting until the time was right for them to pounce. The banks and traders are willing to buy at whatever is the prevailing price and take a bit of a gamble on where the price will be in a few months’ time.”

As trading rules changed, so did supply and regulation. Indonesia and China ramped up production. Colombia became an exporter and EU-ordered deregulation broke down the traditional ways.

“No longer can you guarantee that you can buy one-year, two-year, three-year, four-year contracts on a fixed-price basis and just pass on the cost to your customer because the customer can leave you and they do in droves.”

Living today in south London, Cunningham and his wife, Caoimhe, have three children, Alva, Daire and Maeve, aged six, three and five months.

“London is home now. We had very much anticipated going home before their accents were fixed but as it is we live in Balham. There’s a small Catholic school around the corner that my daughter attends and we have a good community of friends,” says Cunningham. But he did think seriously at one point about moving Global Coal’s operations to Dublin.

“There is no reason with electronic communications why you can’t be located somewhere. In fact, we did look at locations when the higher tax rates were introduced by the Labour government and rubber-stamped by the coalition.

“But London itself is a hub of services to the financial industry. As long as our customers are primarily located here, whether it be in the merchant banks, or elsewhere, we will have operations here.

“We would lose too many staff on the move. I would be there and one or two of the Irish guys working for us would probably be happy to move back. But some of the others may not.”