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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$, lifted by the unprecedented rally in iron ore prices). Hence the Whitehaven Coal and New Hope increase in share price.
The coal export sector outlook seems profitable again – in the near term. But the 25% collapse in the Dalrymple Bay Coal Terminal share price since its initial public offering last week is a clearer perspective of the longterm structural headwinds Australia’s coal industry is facing. Far better for our Hunter Valley, La Trobe Valley and Bowen Basin communities that we as a nation acknowledge the science of climate change, prepare a national roadmap, ideally with a destination and time of arrival clearly acknowledged.
The investment, employment and export opportunities for Australia are enormous, and exciting. To steal a very good line from Ross Garnaut and Mike Cannon-Brookes – better we focus on building Australia as a renewable energy superpower.
This commentary first appeared in The Guardian.
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Wednesday, 10 February 21
FY21 COAL DEMAND MAY BE LOWER THAN PREVIOUSLY ESTIMATED DUE TO COVID-19: PRALHAD JOSHI - PTI
Coal demand in the current fiscal may be lower than the initial estimate of 1,085 million tonnes (MT) due to the impact of COVID-19, Parliament was ...
Wednesday, 10 February 21
MARKET INSIGHT - INTERMODAL
We have just entered February, Chinese New Year holidays are about to start and the SnP market for bulkers is so hot as every seller would dream of ...
Tuesday, 09 February 21
SWITCHING COAL PLANTS TO PLN'S BIOMASS COFIRING PLAN IS NO MAGIC BULLET - IEEFA
Implementation risks for Indonesia PLN's switch from coal to biomass cofiring
PLN’s biomass cofiring plan will require not ...
Friday, 05 February 21
THE INDONESIA COAL PRICE REFERENCE FOR FEBRUARY 2021 SETTLES AT US$ 87.79 PER TON FOB VESSEL
COALspot.com: The Indonesia coal price reference for February 2021 settles at US$ 87.79 per ton FOB vessel. The February reference price is the hig ...
Thursday, 04 February 21
WHY BANGLADESH SHOULDN’T COUNT ON A FOSSIL FUEL FUTURE - IEEFA
Around US$50 billion of LNG projects in Asia at risk of cancellation
Two astonishing figures have circulated in the Asian energy sector in the ...
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- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Miang Besar Coal Terminal - Indonesia
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Thiess Contractors Indonesia
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Petron Corporation, Philippines
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Commonwealth Bank - Australia
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- CNBM International Corporation - China
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Gujarat Electricity Regulatory Commission - India
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Australian Coal Association
- White Energy Company Limited
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- Parliament of New Zealand
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Sakthi Sugars Limited - India
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- SMC Global Power, Philippines
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Deloitte Consulting - India
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- Orica Mining Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Wood Mackenzie - Singapore
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- MS Steel International - UAE
- Kapuas Tunggal Persada - Indonesia
- Globalindo Alam Lestari - Indonesia
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Kideco Jaya Agung - Indonesia
- Maheswari Brothers Coal Limited - India
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Port Waratah Coal Services - Australia
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Ministry of Transport, Egypt
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Coal and Oil Company - UAE
- Metalloyd Limited - United Kingdom
- Posco Energy - South Korea
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Aditya Birla Group - India
- Mintek Dendrill Indonesia
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Essar Steel Hazira Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Uttam Galva Steels Limited - India
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- PTC India Limited - India
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Minerals Council of Australia
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