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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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Tuesday, 22 February 22
CHINA'S DAILY OUTPUT OF COAL REBOUNDS TO OVER 12 MLN TONNES - REUTERS
China’s coal output returned to more than 12 million tonnes per day as of Feb. 20, the country’s state planner said on Monday, a level ...
Thursday, 17 February 22
MAJOR INSTITUTIONS PROVIDED OVER $1.5 TRLN TO COAL SECTOR IN 2019-2021, SAYS NGO GROUP - REUTERS
Financial institutions channelled more than $1.5 trillion into the coal industry in loans and underwriting from January 2019 to November 2021, even ...
Thursday, 17 February 22
APAC THERMAL COAL PRICES TO EASE ON END OF INDONESIA EXPORT BAN - FITCH RATINGS
Fitch Ratings-Shanghai/Singapore-14 February 2022: APAC thermal coal prices are likely to come under pressure in the near term due to seasonally we ...
Tuesday, 15 February 22
IS ANOTHER COAL SHORTAGE CRISIS LOOMING OVER INDIA? - BUSINESS STANDARD
In December last year, the Federation of Indian Mineral Industries (FIMI) shot off a letter to the Prime Minister claiming that the coal crisis was ...
Tuesday, 15 February 22
THERMAL COAL'S RECORD PRICE RUN MAY END UP ITS OWN WORST ENEMY - REUTERS
The price of benchmark Australian thermal coal rose last week to trade near record highs, providing a short-term boost to producers but increasing ...
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- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Bhushan Steel Limited - India
- Electricity Authority, New Zealand
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Petron Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Essar Steel Hazira Ltd - India
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Coalindo Energy - Indonesia
- McConnell Dowell - Australia
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Energy Link Ltd, New Zealand
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- PTC India Limited - India
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Transport, Egypt
- Meenaskhi Energy Private Limited - India
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- MS Steel International - UAE
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Simpson Spence & Young - Indonesia
- Holcim Trading Pte Ltd - Singapore
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Therma Luzon, Inc, Philippines
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- VISA Power Limited - India
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Agrawal Coal Company - India
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Kartika Selabumi Mining - Indonesia
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Bangladesh Power Developement Board
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Orica Mining Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Mintek Dendrill Indonesia
- PNOC Exploration Corporation - Philippines
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Aboitiz Power Corporation - Philippines
- The Treasury - Australian Government
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