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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, 27 January 21
MARKET INSIGHT - INTERMODAL
As we have entered the era off renewable energies, all industries globally give max effort to minimize their carbon footprint and consequently thei ...
Monday, 25 January 21
ULTRAMAX YET ANOTHER POSITIVE WEEK FOR THE SECTOR, WHICH SAW INCREASED DEMAND ACROSS ALL BASINS - BALTIC BRIEFING
Capesize
The Capesize market rocked and rolled these past few days. But by weeks end little had changed on the Capesize 5TC as it settled down ...
Monday, 25 January 21
NEW LAW IN CALIFORNIA, USA, AFFECTING SHIPOWNERS' LIABILITY FOR OIL POLLUTION - BIMCO
Members are advised that amendments to the so-called Lempert-Keene-Seastrand Oil Spill Prevention and Response Act of 1990 in the State of Californ ...
Monday, 25 January 21
COAL INDIA SAYS GEARED UP TO MEET SURGE IN FUEL DEMAND FROM POWER SECTOR - PTI
State-owned Coal India Ltd on Saturday said that it is well geared to meet any surge in demand for coal from the power sector.
The s ...
Sunday, 24 January 21
GOVT ASSURES COAL INDIA OF 'FULL SUPPORT', STRESSES ON LEARNING 'NEW THINGS' - PTI
Coal Minister Pralhad Joshi assured Coal India of full government support, even as he said the PSU needs to learn “new things” for impr ...
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- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Toyota Tsusho Corporation, Japan
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Globalindo Alam Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- International Coal Ventures Pvt Ltd - India
- Standard Chartered Bank - UAE
- PTC India Limited - India
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- Agrawal Coal Company - India
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Madhucon Powers Ltd - India
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Bukit Asam (Persero) Tbk - Indonesia
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Kaltim Prima Coal - Indonesia
- Heidelberg Cement - Germany
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Global Business Power Corporation, Philippines
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Parliament of New Zealand
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Uttam Galva Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Electricity Generating Authority of Thailand
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Sarangani Energy Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- MS Steel International - UAE
- McConnell Dowell - Australia
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- India Bulls Power Limited - India
- Indogreen Group - Indonesia
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