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Thursday, 17 December 20
CHINA'S BAN IS LESS OF A THREAT TO AUSTRALIA'S COAL INDUSTRY THAN INTERNATIONAL CLIMATE AMBITION - IEEFA
 Australian coal exporters will survive this near-term political fight but there are longterm structural headwinds
The decision by China’s National Development and Reform Commission to formally and indefinitely block Australian coal imports is a key threat to Australia’s political and economic wellbeing. Australia can never expect to win a trade war with its biggest export partner, and it is sheer political and economic suicide to try to do so. But is it devastating for the Australian coal export industry? Not at all.
Far more strategically threatening in the long term for Australia and our coal industry is the pledge by China’s president Xi Jinping to reach net zero emissions by 2060, which was rapidly followed by net zero emissions by 2050 pledges from Japan’s prime minister Yoshihide Suga and South Korea’s president Moon Jae-in. This series of sudden and powerful pledges of increased climate ambition by world leaders is likely to be terminal for our coal exports if we look out a couple of decades.
Australia is caught in the geopolitical quandary of having China as our key trade partner and the United States as our key military ally. When US president Donald Trump started a trade war with China, it was never going to turn out well for Australia. And incoming president Joe Biden is unlikely to change tack too materially where China and trade and technology are concerned (whereas on climate, Biden’s arrival changes everything). But we in Australia are like a mouse caught in the middle of two sparring elephants.
In business, the best rule is that the customer is always right (even if they are not). Our coal exporters will however survive this near-term political fight, probably far better than our wine or lobster export industries, by comparison.
There are no coal ships destined for China being loaded in Australia now. For most industries, that would be devastating. For coal, not so much. In fact, a look at the share prices of Whitehaven Coal and New Hope Corporation would suggest quite the opposite. Since the September 2020 trough, and acknowledging the sharp price falls on Tuesday, Whitehaven shares have rallied 70% and New Hope are up almost 20%.
Why? Coal is coal, at least to a finance analyst like me, if not an engineer. Australia sells the vast majority of its coal to Japan, South Korea and Taiwan. And if China buys more Russian, South African and Indonesian coal to replace Australian coal, then we can, by and large, simply swap customers, maybe with a month’s disruption. Total demand doesn’t change, nor does supply – at least not in the near term. Sure, there are some boiler and blending constraints, but notwithstanding coal luddite claims that Australia’s coal is slightly less carbon polluting than someone else’s seaborne coal, the minute difference is irrelevant – all coal is almost 100% more carbon intensive than wind, solar, hydro, nuclear or energy efficiency. Or green ammonia, as Japan’s JERA is now thinking.
The coal industry is actually benefiting from a near-term relief rally. In September Australian coal exporters were losing money with every tonne of coal they exported. In December, the picture is very different. China’s key Shanxi province has just shut down coal production near term due to a spate of deadly accidents, just as winter heating demand has kicked in. Meanwhile the Chinese industrial economy is powering along. So the Chinese domestic thermal coal price has jumped 35% to 740/t yuan in the last three months. Seaborne thermal coal prices have rallied from a low of US$46/t to over US$70/t in the same timeframe. Even as total volume of Australian coal exports have dropped in the December quarter, the value has surged, and more importantly, the profitability much more so (notwithstanding the 10% rally in the Aus$/US$, lifted by the unprecedented rally in iron ore prices). Hence the Whitehaven Coal and New Hope increase in share price.
The coal export sector outlook seems profitable again – in the near term. But the 25% collapse in the Dalrymple Bay Coal Terminal share price since its initial public offering last week is a clearer perspective of the longterm structural headwinds Australia’s coal industry is facing. Far better for our Hunter Valley, La Trobe Valley and Bowen Basin communities that we as a nation acknowledge the science of climate change, prepare a national roadmap, ideally with a destination and time of arrival clearly acknowledged.
The investment, employment and export opportunities for Australia are enormous, and exciting. To steal a very good line from Ross Garnaut and Mike Cannon-Brookes – better we focus on building Australia as a renewable energy superpower.
This commentary first appeared in The Guardian.
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Monday, 08 March 21
MARCH 2021 INDONESIA COAL PRICE REFERENCE SETTLES LOWER
COALspot.com: The Indonesia coal price reference for March 2021 settles at US$ 84.49 per ton FOB vessel.
The Indonesia coal pr ...
Saturday, 06 March 21
AUSTRALIAN COAL: SOME WEAKNESS COULD MATERIALIZE AFTER THE WINTER - ING
Newcastle coal prices remain well supported for now, however as we move out of the winter months we would expect prices to come under pressure. Mea ...
Saturday, 06 March 21
ASIA SEABORNE COAL PRICES START TO RETREAT, CHINA-AUSTRALIA DISPUTE LINGERS - REUTERS
There are signs that the price and demand surge for coal during the recent colder-than-expected winter across North Asia is starting to ease, even ...
Thursday, 04 March 21
HEAD OF JBIC SAYS THE JAPANESE BANK WILL NOT FUND NEW COAL PLANT DEVELOPMENT - NHK NEWS
The governor of the Japan Bank for International Cooperation has said that the government-owned financial institution will stop funding new coal-fi ...
Wednesday, 03 March 21
MARKET INSIGHT - INTERMODAL
Following the recent rally to multi year highs of metal-based commodities, amid an unprecedented global economic stimulus, discussions of an emergi ...
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- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Romanian Commodities Exchange
- The University of Queensland
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- Minerals Council of Australia
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- Wood Mackenzie - Singapore
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- Billiton Holdings Pty Ltd - Australia
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- Price Waterhouse Coopers - Russia
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- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Africa Commodities Group - South Africa
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- McConnell Dowell - Australia
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- White Energy Company Limited
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- The State Trading Corporation of India Ltd
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- Toyota Tsusho Corporation, Japan
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- Ministry of Transport, Egypt
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- Edison Trading Spa - Italy
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- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
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- TNB Fuel Sdn Bhd - Malaysia
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Australian Coal Association
- Mjunction Services Limited - India
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- Parry Sugars Refinery, India
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- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
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- Bhatia International Limited - India
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- Asmin Koalindo Tuhup - Indonesia
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
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- Planning Commission, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Business Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- Siam City Cement - Thailand
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
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- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
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- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
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- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- PNOC Exploration Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Renaissance Capital - South Africa
- Jorong Barutama Greston.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Carbofer General Trading SA - India
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Authority, New Zealand
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Oldendorff Carriers - Singapore
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Makarim & Taira - Indonesia
- CIMB Investment Bank - Malaysia
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Latin American Coal - Colombia
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- Mintek Dendrill Indonesia
- Australian Commodity Traders Exchange
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- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
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- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Metalloyd Limited - United Kingdom
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- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- SMC Global Power, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Standard Chartered Bank - UAE
- Marubeni Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
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