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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, 27 January 21
MARKET INSIGHT - INTERMODAL
As we have entered the era off renewable energies, all industries globally give max effort to minimize their carbon footprint and consequently thei ...
Monday, 25 January 21
ULTRAMAX YET ANOTHER POSITIVE WEEK FOR THE SECTOR, WHICH SAW INCREASED DEMAND ACROSS ALL BASINS - BALTIC BRIEFING
Capesize
The Capesize market rocked and rolled these past few days. But by weeks end little had changed on the Capesize 5TC as it settled down ...
Monday, 25 January 21
NEW LAW IN CALIFORNIA, USA, AFFECTING SHIPOWNERS' LIABILITY FOR OIL POLLUTION - BIMCO
Members are advised that amendments to the so-called Lempert-Keene-Seastrand Oil Spill Prevention and Response Act of 1990 in the State of Californ ...
Monday, 25 January 21
COAL INDIA SAYS GEARED UP TO MEET SURGE IN FUEL DEMAND FROM POWER SECTOR - PTI
State-owned Coal India Ltd on Saturday said that it is well geared to meet any surge in demand for coal from the power sector.
The s ...
Sunday, 24 January 21
GOVT ASSURES COAL INDIA OF 'FULL SUPPORT', STRESSES ON LEARNING 'NEW THINGS' - PTI
Coal Minister Pralhad Joshi assured Coal India of full government support, even as he said the PSU needs to learn “new things” for impr ...
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- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- The Treasury - Australian Government
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Barasentosa Lestari - Indonesia
- Independent Power Producers Association of India
- Vijayanagar Sugar Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Australian Commodity Traders Exchange
- SN Aboitiz Power Inc, Philippines
- ASAPP Information Group - India
- The University of Queensland
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Orica Mining Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Cigading International Bulk Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- The State Trading Corporation of India Ltd
- VISA Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Krishnapatnam Port Company Ltd. - India
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- Australian Coal Association
- London Commodity Brokers - England
- Vedanta Resources Plc - India
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Ind-Barath Power Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Coal and Oil Company - UAE
- Sarangani Energy Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- South Luzon Thermal Energy Corporation
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Kideco Jaya Agung - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Aditya Birla Group - India
- Parliament of New Zealand
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sical Logistics Limited - India
- Sinarmas Energy and Mining - Indonesia
- Price Waterhouse Coopers - Russia
- Thai Mozambique Logistica
- Planning Commission, India
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- IEA Clean Coal Centre - UK
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
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