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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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Friday, 13 November 20
SHIPPING OUTLOOK TURNS STABLE ON EBITDA GROWTH, IMPROVING SUPPLY-DEMAND BALANCE - MOODY’S
Outlook revised to stable from negative.
The global shipping industry is on course to perform better overall than we had previously ex ...
Friday, 13 November 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Monday, 09 November 20
INDONESIA MAY CUT BIODIESEL USE TARGET AS SUBSIDY FUND DEPLETES - FITCH
The Indonesian government may rein in its push to increase use of biodiesel as it now comes at higher cost following a fall in crude oil prices and ...
Monday, 09 November 20
SOUTH AFRICA: COAL MARKET CONDITIONS HAVE ' DETERIORATED MATERIALLY' - IEEFA
The Asian seaborne thermal coal pool is drying out
Resource Generation Ltd’s proposed but long delayed Boikarabelo coal mine i ...
Friday, 06 November 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- The University of Queensland
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Deloitte Consulting - India
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Heidelberg Cement - Germany
- VISA Power Limited - India
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Kumho Petrochemical, South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- Ministry of Transport, Egypt
- Vedanta Resources Plc - India
- Planning Commission, India
- Kartika Selabumi Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Africa Commodities Group - South Africa
- AsiaOL BioFuels Corp., Philippines
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Madhucon Powers Ltd - India
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Orica Mining Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Sinarmas Energy and Mining - Indonesia
- CIMB Investment Bank - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Toyota Tsusho Corporation, Japan
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Neyveli Lignite Corporation Ltd, - India
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- Meralco Power Generation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- TeaM Sual Corporation - Philippines
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Thiess Contractors Indonesia
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