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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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Wednesday, 02 September 20
INDONESIA COAL PRICE REFERENCE DIVES FURTHER IN SEPTEMBER DUE TO SUBDUED DEMAND & GLOBAL OVERSUPPLY
Subdued demand & global oversupply pushed down this month's HBA
COALspot.com: The Indonesia Coal Price Reference ...
Tuesday, 01 September 20
WHY INDIA CAN'T MATCH THE GULF REGION'S RECORD-LOW SOLAR TARIFFS - IEEFA
5-10% annual decline in tariffs estimated for the next decade
A number of countries in the Gulf region have set record-low prices for solar in ...
Tuesday, 01 September 20
COVID-19 PUSHES US LNG INTO A TIGHT SPOT - DREWRY
The pandemic-led weak projections for economic growth will derail US LNG exports in full-year 2020 with the country also losing ground in the long ...
Monday, 31 August 20
DEFECTIVE PASSAGE PLANNING: UNSEAWORTHINESS OR A NAVIGATIONAL DECISION? THE CMA CGM LIBRA QUESTION SAILS ON TO THE UK SUPREME COURT - GARD
KNOWLEDGE TO ELEVATE
The UK Supreme Court has granted leave to appeal the recent decision in Alize 1954 v Allianz Elementar Versicherungs AG ( ...
Sunday, 30 August 20
PANAMAX - THIS WEEK THE DEMAND HAS PICKED UP, BUT THE TONNAGE LIST IS INCREASING DAY BY DAY - FEARNLEYS
Cape Size
More or less flat from previous week, with cape rates moving from US$ 19,500 to 18,900 on average. West Australia however being more ...
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- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- ICICI Bank Limited - India
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- Central Electricity Authority - India
- The University of Queensland
- Deloitte Consulting - India
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- VISA Power Limited - India
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Ministry of Transport, Egypt
- Gujarat Mineral Development Corp Ltd - India
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- White Energy Company Limited
- CNBM International Corporation - China
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Videocon Industries ltd - India
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- CIMB Investment Bank - Malaysia
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Bukit Asam (Persero) Tbk - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- LBH Netherlands Bv - Netherlands
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- GAC Shipping (India) Pvt Ltd
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- Indonesian Coal Mining Association
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sakthi Sugars Limited - India
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- South Luzon Thermal Energy Corporation
- Mercator Lines Limited - India
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
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