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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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Sunday, 01 November 20
GRADUAL RECOVERY FOR INDONESIAN COAL FROM 4Q20; RISKS REMAIN - FITCH RATINGS
Fitch Ratings expects the credit metrics of Indonesian coal miners and coal contractors to improve from 4Q20 with the recovery in volumes and price ...
Wednesday, 28 October 20
BIODIESEL - NEW FUELS, NEW CHALLENGES - GARD | DNV GL
KNOWLEDGE TO ELEVATE
One of numerous possible ways to comply with the IMO’s strategy on the reduction of greenhouse gas (GHG) emissions ...
Wednesday, 28 October 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.35 PCT - XINHUA
China Taiyuan coal transaction price index stood at 127.94 points Monday, up 0.35 percent week on week.
The index, released by China ...
Wednesday, 28 October 20
MARKET INSIGHT - INTERMODAL
The global strive towards eco-friendliness and environmental sustainability in the shipping industry is mounting. There are currently almost 200 co ...
Tuesday, 27 October 20
PLN STILL REFUSING TO ADAPT, A MOVE WHICH WILL HURT INVESTORS, CONSUMERS, AND THE GOVERNMENT PURSE - IEEFA
Utility’s latest planning report locks PLN into the past
PLN would be better served restructuring its business to address the current en ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Eastern Energy - Thailand
- Attock Cement Pakistan Limited
- Renaissance Capital - South Africa
- The University of Queensland
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Coalindo Energy - Indonesia
- London Commodity Brokers - England
- Videocon Industries ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- European Bulk Services B.V. - Netherlands
- Kobexindo Tractors - Indoneisa
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Karaikal Port Pvt Ltd - India
- Star Paper Mills Limited - India
- Ministry of Transport, Egypt
- Parliament of New Zealand
- TeaM Sual Corporation - Philippines
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- SMC Global Power, Philippines
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Sical Logistics Limited - India
- Planning Commission, India
- Thiess Contractors Indonesia
- Agrawal Coal Company - India
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kideco Jaya Agung - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- MS Steel International - UAE
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- Alfred C Toepfer International GmbH - Germany
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Gujarat Mineral Development Corp Ltd - India
- Savvy Resources Ltd - HongKong
- Meralco Power Generation, Philippines
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Altura Mining Limited, Indonesia
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Power Finance Corporation Ltd., India
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- CNBM International Corporation - China
- VISA Power Limited - India
- Indika Energy - Indonesia
- Independent Power Producers Association of India
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