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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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- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- Larsen & Toubro Limited - India
- Singapore Mercantile Exchange
- Kapuas Tunggal Persada - Indonesia
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Indo Tambangraya Megah - Indonesia
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Eastern Energy - Thailand
- Mercuria Energy - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- The Treasury - Australian Government
- GMR Energy Limited - India
- Bhatia International Limited - India
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- VISA Power Limited - India
- Xindia Steels Limited - India
- Sarangani Energy Corporation, Philippines
- Makarim & Taira - Indonesia
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Barasentosa Lestari - Indonesia
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Dalmia Cement Bharat India
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Eastern Coal Council - USA
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- Kideco Jaya Agung - Indonesia
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Rio Tinto Coal - Australia
- Parry Sugars Refinery, India
- Siam City Cement - Thailand
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Commonwealth Bank - Australia
- PNOC Exploration Corporation - Philippines
- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Petrochimia International Co. Ltd.- Taiwan
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Videocon Industries ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Planning Commission, India
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Ministry of Mines - Canada
- Star Paper Mills Limited - India
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