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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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Wednesday, 24 February 21
MARKET INSIGHT - INTERMODAL
With yields of up to 563%, the shares of Greek shipping companies listed on Wall Street are recorded. The Coronavirus pandemic has not significantl ...
Sunday, 21 February 21
ANZ DIVESTING FROM THE WORLD’S LARGEST COAL EXPORT PORT IS 'PRAGMATISM' - IEEFA
The biggest buyers of Australian thermal coal have committed to net-zero emissions
ANZ, Australia’s third largest bank, has decided to s ...
Sunday, 21 February 21
EDITORIAL: TIME FOR BANGLADESH TO FOCUS ON RENEWABLE ENERGY, NOT COAL - DHAKA TRIBUNE
Shifting away from coal is not only desirable, but absolutely necessary in these times.
In spite of being detrimental to environment ...
Wednesday, 17 February 21
STRANDED ASSETS A LONG-TERM RISK FOR MAJOR FOSSIL FUEL EXPORTERS - FITCH RATINGS
Fossil exporters face a loss of GDP, government revenue and export receipts from the transition to a lower-carbon economy over the coming decades. ...
Friday, 12 February 21
U.S: WIND SURPASSED COAL AS NO. 1 FUEL SOURCE IN 2020 FOR SOUTHWEST POWER POOL - IEEFA
Wind energy growth due to geography, design factors, and new installations
Wind surpassed coal as the primary power generation sourc ...
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- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
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- OPG Power Generation Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- GVK Power & Infra Limited - India
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- Ministry of Mines - Canada
- Indonesian Coal Mining Association
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- Parliament of New Zealand
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- Indian Energy Exchange, India
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- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- CNBM International Corporation - China
- Aditya Birla Group - India
- Electricity Generating Authority of Thailand
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Australian Commodity Traders Exchange
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- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- PTC India Limited - India
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Central Java Power - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Georgia Ports Authority, United States
- IEA Clean Coal Centre - UK
- CIMB Investment Bank - Malaysia
- White Energy Company Limited
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Gujarat Electricity Regulatory Commission - India
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- Kapuas Tunggal Persada - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Posco Energy - South Korea
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Vedanta Resources Plc - India
- Mercuria Energy - Indonesia
- SMG Consultants - Indonesia
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bangladesh Power Developement Board
- Eastern Energy - Thailand
- Grasim Industreis Ltd - India
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
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