While coal becomes increasingly viewed as a “sunset” business in other countries, Australian coal production is on the up
If one of the largest world banks has walked away from offering to finance the development of Adani’s multi-billion dollar Carmichael mine coal project in the Galilee Basin – what does this mean for the Australian coal industry?
While the media-targeted coal sector is now viewed by many as a “sunset” business, Australian mining companies say to stop coal mining in Australia is simply an unrealistic view, said James Wilson, an analyst with Morgans Financial in Perth. One of the reasons he stated this was because many of the biggest and most efficient mines in the world are found in Australia.
Global banks have tipped over 4.1 billion Australian dollars into Australian coal projects over the last 18 months. This is despite thermal coal prices having dropped some 28 per cent fall over the same period.
Exports of coal from Australia are expected to rise in 2015 to over 200 million tonnes
Coal exports from Australia are expected to rise to 202.9 million tonnes in 2015. Indonesia is the country that is beating Australia at this time in terms of export volumes, however, Australia produces 100 per cent more coal than Russia.
Australian Prime Minister Tony Abbott said coal “is good for humanity” and for Australia, because it drives jobs and also generates billions in government taxes and royalties – so it is in the best interest of the PM to be promoting the coal sector.
This year, Australian coal is forecast to generate $34.6 billion†in overseas sales, which is more than iron ore, the country’s most lucrative export, said Australia’s Department of Industry and Science.
Increasing coal demand from Asia could be the key to once more developing more coal assets in Australia.
The government decision to overturn the ruling that allowed Indian-based Adani to go ahead full-steam and develop it’s Galilee Basin mine came as a shock to everyone. The loss of 1000’s of jobs as well as the loss to the government in terms of royalties has rocked the nation.
Although it’s not over yet, as Adani continue to fight for the right, although in a more subdued way, to mine coal from it’s inland Carmichael mine. As we all know, huge coal deposits lie in the Galilee Basin, however the location of the thermal coal asset, being some 300 plus kilometres from the ship loading facilities at Abbot Point near Bowen – have caused headaches for Adani.
Stiff opposition to developing a rail link from the mine to the port continually scuttled Adani’s plans and eventually brought the project to a halt. The threat of disruption to ground-water supplies, endangered species and the reality of possibly fouling the Great Barrier Reef were three of the contributors to the cessation of the project.
If Australian coal mining projects are halted – other countries jump in
Advocates for more coal mining warn if Australian coal resources aren’t utilised, India and other foreign buyers will knock on Indonesia and South Africa’s door and simply load up their coal and ship it to their own power generating plants. When this happens, Australia becomes detrimented and the economic benefits dissipate and the threat to the environment increases.
“If these countries cannot source Australian coal, they will simply seek it elsewhere, and that coal may not be as high quality, producing a worse outcome for global carbon emissions while denying Australia jobs,” said Michael Roche, chief executive of mining lobby Queensland Resources Council.
Adani has argued that its Carmichael mine is necessary if Indian Prime Minister Narendra Modi is to keep his promise to bring India’s poverty-stricken population into the 21st century by providing electricity to them for the first time.
Even the leader of†Katter’s Australian Party, Bob Katter, has demanded the establishment of an independent commission to drive the development of a rail line to open up coal mining in the Galilee Basin where the controversial Adani Carmichael Coal Mine is proposed.
India to use around 300-500 large coal-fired power stations
The International Energy Agency has forecast that India will add 342 gigawatt of coal-fired electrical generation capacity by 2040, which is equal to a massive 300-500 large coal-fired power stations which will each need around 1.5 million tonnes of coal a year.
Whichever path you choose to follow, either you are for coal development in Australia or not, we can’t ignore what is happening right now in the Australia coal sector. The jobs are still there, although not as many as in the buoyant times we experienced when coal and iron ore was in high demand from developing countries like China.
Our Asian neighbours like Korea and Japan are also developing their internal systems as manufacturing and urbanisation continues to develop.
Coal will not be going away – it is needed because the alternatives just don’t stack up. Do we really want nuclear power plants? Can wind farms power entire cities? Can solar give us what we need in terms of energy?