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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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Thursday, 17 December 20
BUMA SIGNED US$1.0 BILLION WORTH OF EXTENSION CONTRACT WITH BERAU COAL
PT Bukit Makmur Mandiri Utama, subsidiary of PT Delta Dunia Makmur Tbk., has extended its mining services contracts with PT Berau Coal, in relation ...
Wednesday, 16 December 20
INDONESIA 2020 COAL CONSUMPTION ESTIMATED AT 140-145 MLN TONNES - OFFICIAL, REUTERS REPORTED
Indonesia’s domestic coal consumption is estimated at 140-145 million tonnes this year, Dodik Ariyanto, an official at the energy ministry, t ...
Wednesday, 16 December 20
RUSSIA REVISES DOWN EXPORT EXPECTATION - FITCH
The Ministry of Economy of Russia, the world’s third largest thermal coal exporting country, released its annual forecasts ...
Wednesday, 16 December 20
INDIAN COAL IMPORTS TO REMAIN SUBDUED - FITCH RATINGS
Fitch Rating commented on Indian Coal Imports, Fitch said, coal imports by Indian utilities fell by about 24% yoy to 44 million tonnes (mt) i ...
Wednesday, 16 December 20
CHINA TO BOOST DOMESTIC SUPPLY - FITCH
China’s benchmark Qinhuangdao 5,500kcal/kg coal price rose above the government’s upper yellow interval of CNY600/tonne in early Octobe ...
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- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- MS Steel International - UAE
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- Directorate Of Revenue Intelligence - India
- TeaM Sual Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Posco Energy - South Korea
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Essar Steel Hazira Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Iligan Light & Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- New Zealand Coal & Carbon
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Energy - Thailand
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Sree Jayajothi Cements Limited - India
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- VISA Power Limited - India
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Tamil Nadu electricity Board
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Latin American Coal - Colombia
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Bharathi Cement Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Aditya Birla Group - India
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Price Waterhouse Coopers - Russia
- SMC Global Power, Philippines
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Mercuria Energy - Indonesia
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- CNBM International Corporation - China
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