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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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Monday, 26 October 20
'LONG ASCENT' TO RECOVERY OF GLOBAL GROWTH - BALTIC EXCHANGE
The global economy has so far avoided a “financial catastrophe” but growth projections from the International Monetary Fund’s lat ...
Friday, 23 October 20
SHIPPING LOANS AND COLLATERAL DAMAGE - VICTOR ONYEGBADO, AKABOGU & ASSOCIATES
KNOWLEDGE TO ELEVATE
Shipping finance transactions are characterised by peculiar risk factors principally on account of the shipping asset&rsq ...
Friday, 23 October 20
WHAT WILL THE 2020 ELECTIONS MEAN FOR US ENERGY? - WOOD MACKENZIE
The 2020 elections present American voters with a choice between two radically different visions for the future of energy. President Donald Trump r ...
Wednesday, 21 October 20
BRAZIL EXPORTED 238.7 MLN TONNES OF IRON ORE IN THE FIRST 9 MONTHS OF 2020 - BANCHERO COSTA
Brazil’s iron ore exports have been gradually but steadily recovering following a disastrous winter period of 2019/2020. In the first 9 month ...
Wednesday, 21 October 20
INDIA: THE COMMERCIALISATION OF COAL BLOCKS WILL BENEFIT THE ECONOMY - HINDU BUSINESS LINE
As the government of India receives 76 bids for 23 coal mines against the 38 up on auction, what does this commercialisation of coal block allocati ...
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- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Kobexindo Tractors - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Edison Trading Spa - Italy
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Merrill Lynch Commodities Europe
- Savvy Resources Ltd - HongKong
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Gujarat Mineral Development Corp Ltd - India
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- CNBM International Corporation - China
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Barasentosa Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Riau Bara Harum - Indonesia
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Planning Commission, India
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Petron Corporation, Philippines
- Wilmar Investment Holdings
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Coalindo Energy - Indonesia
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- The University of Queensland
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- CIMB Investment Bank - Malaysia
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Tata Chemicals Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- New Zealand Coal & Carbon
- Maharashtra Electricity Regulatory Commission - India
- VISA Power Limited - India
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Minerals Council of Australia
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
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