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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, 05 November 20
THE INDONESIA COAL PRICE REFERENCE RISES FOR SECOND CONSECUTIVE MONTH
COALspot.com: The Indonesia Coal Price Reference rose for a 2nd month by 9.24% month on month. The Indonesia Coal Price Reference for the month of ...
Wednesday, 04 November 20
PHILIPPINES COAL MORATORIUM HIGHLIGHTS DRAMATIC PIVOT TO RENEWABLE ENERGY INVESTMENT FOR LOWER PRICES AND POWER SYSTEM RESILIENCE - IEEFA
Policymakers and industry leaders ready to embrace new energy technologies
The Department of Energy’s call for a moratorium on ...
Wednesday, 04 November 20
FOREIGN INVESTORS FACE TOUGH TIMES CLOSING VIETNAM’S REMAINING COAL POWER DEALS - IEEFA
Project bankability at risk as new regulations threaten usual contractual terms
Foreign investors will face higher-than-usual risks ...
Wednesday, 04 November 20
MARKET INSIGHT - INTERMODAL
As the end of the year approaches, one would definitely notice that the newbuilding orderbook for bulk carriers is significantly smaller compared t ...
Monday, 02 November 20
PHILIPPINES GOVERNMENT SAYS NO TO NEW COAL PLANT PROPOSALS - IEEFA | 24 PILIPINAS
The Duterte administration will no longer accept proposals to construct new coal power plants, a dramatic shift in energy policy that counts on dec ...
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- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Australian Coal Association
- Eastern Energy - Thailand
- PowerSource Philippines DevCo
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- The University of Queensland
- Kumho Petrochemical, South Korea
- Planning Commission, India
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Wood Mackenzie - Singapore
- Merrill Lynch Commodities Europe
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Edison Trading Spa - Italy
- Bukit Baiduri Energy - Indonesia
- Petron Corporation, Philippines
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Parry Sugars Refinery, India
- Mjunction Services Limited - India
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- SMC Global Power, Philippines
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- PTC India Limited - India
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Binh Thuan Hamico - Vietnam
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- TeaM Sual Corporation - Philippines
- Orica Mining Services - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Vedanta Resources Plc - India
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Indian Oil Corporation Limited
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Sojitz Corporation - Japan
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Economic Council, Georgia
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- Deloitte Consulting - India
- Savvy Resources Ltd - HongKong
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
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