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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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Friday, 13 November 20
SHIPPING OUTLOOK TURNS STABLE ON EBITDA GROWTH, IMPROVING SUPPLY-DEMAND BALANCE - MOODY’S
Outlook revised to stable from negative.
The global shipping industry is on course to perform better overall than we had previously ex ...
Friday, 13 November 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Monday, 09 November 20
INDONESIA MAY CUT BIODIESEL USE TARGET AS SUBSIDY FUND DEPLETES - FITCH
The Indonesian government may rein in its push to increase use of biodiesel as it now comes at higher cost following a fall in crude oil prices and ...
Monday, 09 November 20
SOUTH AFRICA: COAL MARKET CONDITIONS HAVE ' DETERIORATED MATERIALLY' - IEEFA
The Asian seaborne thermal coal pool is drying out
Resource Generation Ltd’s proposed but long delayed Boikarabelo coal mine i ...
Friday, 06 November 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
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- Billiton Holdings Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Australian Commodity Traders Exchange
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Minerals Council of Australia
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Agrawal Coal Company - India
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meralco Power Generation, Philippines
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- Xindia Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Salva Resources Pvt Ltd - India
- Star Paper Mills Limited - India
- Australian Coal Association
- Goldman Sachs - Singapore
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Uttam Galva Steels Limited - India
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Vedanta Resources Plc - India
- Sojitz Corporation - Japan
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- MS Steel International - UAE
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Chamber of Mines of South Africa
- Mjunction Services Limited - India
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Latin American Coal - Colombia
- GMR Energy Limited - India
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Mintek Dendrill Indonesia
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Lanco Infratech Ltd - India
- Larsen & Toubro Limited - India
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- The University of Queensland
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Baramulti Group, Indonesia
- Petrochimia International Co. Ltd.- Taiwan
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