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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, 10 April 19
KOSPO INVITED BIDS FOR 160K MT OF MIN. 3700 NCV COAL FOR JUNE LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 160,000 MT of min. 3,800 Kcal/kg ~max.4,100 ...
Wednesday, 10 April 19
CHINA'S GROWING THERMAL COAL SUPPLY TO PRESSURE EXPORTERS - FITCH RATINGS
Growing Chinese thermal coal supply is likely to lead to further tightening of import controls by the government, putting pressure on seaborne coal ...
Wednesday, 10 April 19
SHIPPING MARKET INSIGHT - INTERMODAL
The tragedy in Brazil’s Vale Brumadinho where a tailings dam collapsed in January ranks among the world’s worst mining disasters. It co ...
Monday, 08 April 19
5TH INDIA NUCLEAR NEW BUILD CONGRESS 2019
5th India Nuclear New Build Congress 2019
The congress in Mumbai aims to bring together representatives from governments, regulators ...
Monday, 08 April 19
THERMAL COAL PRICES FALL, INDIAN POWER PLANTS TO SEE LIMITED GAINS - BUSINESS STANDARD
Thermal coal prices are on a downward spiral globally. Australian coal prices have fallen nearly 20 per cent in the past week, and 40 per cent from ...
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- Global Business Power Corporation, Philippines
- Australian Coal Association
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Kapuas Tunggal Persada - Indonesia
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Central Java Power - Indonesia
- Indian Oil Corporation Limited
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Directorate Of Revenue Intelligence - India
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- Larsen & Toubro Limited - India
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Minerals Council of Australia
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- Parliament of New Zealand
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- The University of Queensland
- Mercator Lines Limited - India
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Energy - Thailand
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Posco Energy - South Korea
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Kepco SPC Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- OPG Power Generation Pvt Ltd - India
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Coalindo Energy - Indonesia
- Romanian Commodities Exchange
- London Commodity Brokers - England
- VISA Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Goldman Sachs - Singapore
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- Planning Commission, India
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- IHS Mccloskey Coal Group - USA
- Bharathi Cement Corporation - India
- White Energy Company Limited
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Straits Asia Resources Limited - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Petron Corporation, Philippines
- Bhatia International Limited - India
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Trasteel International SA, Italy
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- Rio Tinto Coal - Australia
- Dalmia Cement Bharat India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
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