China coal demand strong for Australian coal

Chinese coal demand is a bonus for Australian mining companies

Chinese demand still strong for Australian coal

Australian mining companies can still be confident about the future of coal exports to China after a recent article revealed coal exports to China were expected to grow over the coming years.

The Age newspaper reported that the Chinese appetite for Australian coal will steadily grow over the coming years. A new report predicted that while the speed of growth will be slower, Chinese demand for high-quality Australian coal will increase.

This is partly due to the sliding Aussie dollar over the next five years. In terms of Chinese coal demand, that’s going to be somewhere around the 9 billion-tonne level by 2019.

The 9 billion tonnes of imported coal accounts for three-fifths of global demand growth in the coming years, as the world’s second largest economy shifts towards an economy driven more by domestic consumption rather than development of housing, roads and cities.

This news is a stark contrast from conflicting reports over the last few months claiming China is clamping down on coal imports owing to the issue of pollution and smog.Chinese coal mines have been notorious for producing high ash and sulphur run-of-mine coal over many decades, which has contributed to its internal environmental problems with air pollution.

Indonesian coal mining slowdown a big plus for Australian mining companies

Another plus for Australian mining companies who have invested heavily in their coal asset development is the news that Indonesia is slowing its coal production output.

With this in mind, Australia is set to account for the largest growth in coal exports according to the International Energy Agency’s annual Medium-Term Coal Market Report.

The world’s biggest producer of seaborne thermal coal, Glencore, has produced a statement highlighting the fact that sliding commodity prices and higher costs has meant that about 36 per cent of Australian coal mines were unprofitable.

Whilst it’s common knowledge to those of us who work in the mining sector in Australia that coal prices have declined since 2013, the Medium-Term Coal Market Report highlights several factors which could assist coal mining companies in Australia be a little more immune from further economic pain.

India to be a huge consumer of Australian coal

India will also be at the forefront of domestic coal import growth, as well as other countries in Asia. This factor alone will go some ways to offsetting weaker growth in Europe and the United States – which is trying to become more self sufficient as it tries to master the art of shale gas extraction.

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Australian government predicts steady growth for China

If you owned a business and each year you had 7%  growth, my guess is you’d be pretty happy with that; but what if growth slowed and even fell. What would that mean to your business and how would you combat this?
That’s what the Australian government is predicting for China over the coming years, although it is stating China’s forecast growth may fall beneath 7 per cent over the next two years for the first time since 1990.Despite the home grown government predictions, the Chinese government itself has previously forecast growth in the order of 7 to 7.5 per cent and many economists argue that it still has many policy tools at its disposal to achieve this target in 2015.

Coal demand growing

It’s expected that coal demand will increase at an average rate of 2.1 per cent per year through to 2019, the Medium-Term Coal Market report said. This compares to the 2013 report’s forecast of 2.3 per cent for the five years through 2018 and the actual growth rate of 3.3 per cent per year between 2010 and 2013. The report also said that it would be another 5 years before we would see Chinese coal imports peaking. This is good news for Australian mining companies who are continually reinventing the way their coal mining operations are managed.
Cost reductions and efficiency are the main focuses of mining companies moving forward into the future. Combining these with increases in production, and mining companies hope to weather the storm, setting the scene for long-term mining jobs in Australia.

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