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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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Saturday, 27 February 21
CHINA'S BENCHMARK POWER COAL PRICE EDGES DOWN - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Saturday, 27 February 21
FITCH RATINGS REVISES GLOBAL METALS AND MINING PRICE ASSUMPTIONS
Fitch Ratings has revised some of its metals and mining price assumptions as prices for many commodities will benefit in the short term from return ...
Saturday, 27 February 21
MITSUBISHI PULLS OUT OF VINH TAN 3 COAL PROJECT IN VIETNAM - NIKKEI ASIA
Japanese trading house Mitsubishi Corp. decided Thursday to withdraw from the Vinh Tan 3 coal-fired power plant project in Vietnam amid growing int ...
Thursday, 25 February 21
ARE WE ON THE CUSP OF ANOTHER MINING SUPER-CYCLE? - WOOD MACKENZIE
As the first wave of the coronavirus pandemic began to bite, many observers confidently predicted that the end was nigh for global economic activit ...
Thursday, 25 February 21
2020 PROVED TO BE A TRULY TERRIBLE YEAR FOR SEABORNE COAL TRADE - BANCHERO COSTA
Total loadings in the 12 months of 2020 were down -12.7% year-on-year to 1,130 million tonnes, according to vessels tracking data from Refinitiv, s ...
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- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Mercuria Energy - Indonesia
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- The University of Queensland
- SMG Consultants - Indonesia
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Krishnapatnam Port Company Ltd. - India
- Straits Asia Resources Limited - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Thai Mozambique Logistica
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Star Paper Mills Limited - India
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Ministry of Finance - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Manunggal Multi Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- White Energy Company Limited
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Kobexindo Tractors - Indoneisa
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Sojitz Corporation - Japan
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Antam Resourcindo - Indonesia
- Gujarat Sidhee Cement - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indo Tambangraya Megah - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Lanco Infratech Ltd - India
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- South Luzon Thermal Energy Corporation
- Energy Link Ltd, New Zealand
- VISA Power Limited - India
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Sical Logistics Limited - India
- Meralco Power Generation, Philippines
- Standard Chartered Bank - UAE
- Medco Energi Mining Internasional
- Ind-Barath Power Infra Limited - India
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Sree Jayajothi Cements Limited - India
- Banpu Public Company Limited - Thailand
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Coal and Oil Company - UAE
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Aditya Birla Group - India
- Mjunction Services Limited - India
- Chamber of Mines of South Africa
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
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