China's Voracious Steel Demand Fires Up Fording Canadian Coal.(THE IBD 100)

Byline: JONAH KERI

When a government loosens controls and encourages business in an emerging market, the effects can be astounding. Few nations exemplify that kind of boom better than China.

As the country of nearly 1.3 billion people grows by leaps and bounds, the IBD 100 has profiled industries ranging from dot-coms to diesel engine makers, all of whom have flourished by tapping into China's growth.

But what does a Canadian coal producer have to do with a burgeoning economy half a world away?

Plenty. Fording Canadian Coal Trust is the No. 2 player in the coking coal industry. Coking coal forms the substance known as coke. Mix coke with iron ore and limestone in a blast furnace, and you've got steel.

As China rapidly builds skyscrapers, bridges and other infrastructure, demand for steel has surged.

But Fording's growth goes beyond merely feeding that monster. The shift in China's steel usage, from an exporter to an importer, has tilted the global supply and demand balance for coking coal. Higher demand has led to higher prices, and heady gains for Fording's bottom line and its stock.