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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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Sunday, 01 November 20
GRADUAL RECOVERY FOR INDONESIAN COAL FROM 4Q20; RISKS REMAIN - FITCH RATINGS
Fitch Ratings expects the credit metrics of Indonesian coal miners and coal contractors to improve from 4Q20 with the recovery in volumes and price ...
Wednesday, 28 October 20
BIODIESEL - NEW FUELS, NEW CHALLENGES - GARD | DNV GL
KNOWLEDGE TO ELEVATE
One of numerous possible ways to comply with the IMO’s strategy on the reduction of greenhouse gas (GHG) emissions ...
Wednesday, 28 October 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.35 PCT - XINHUA
China Taiyuan coal transaction price index stood at 127.94 points Monday, up 0.35 percent week on week.
The index, released by China ...
Wednesday, 28 October 20
MARKET INSIGHT - INTERMODAL
The global strive towards eco-friendliness and environmental sustainability in the shipping industry is mounting. There are currently almost 200 co ...
Tuesday, 27 October 20
PLN STILL REFUSING TO ADAPT, A MOVE WHICH WILL HURT INVESTORS, CONSUMERS, AND THE GOVERNMENT PURSE - IEEFA
Utility’s latest planning report locks PLN into the past
PLN would be better served restructuring its business to address the current en ...
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- San Jose City I Power Corp, Philippines
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Coastal Gujarat Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Jorong Barutama Greston.PT - Indonesia
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- MS Steel International - UAE
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- PNOC Exploration Corporation - Philippines
- Tamil Nadu electricity Board
- Mintek Dendrill Indonesia
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- ASAPP Information Group - India
- London Commodity Brokers - England
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Semirara Mining Corp, Philippines
- Bulk Trading Sa - Switzerland
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Planning Commission, India
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- PTC India Limited - India
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Global Business Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Posco Energy - South Korea
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Leighton Contractors Pty Ltd - Australia
- GAC Shipping (India) Pvt Ltd
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- ICICI Bank Limited - India
- Krishnapatnam Port Company Ltd. - India
- Thai Mozambique Logistica
- Mjunction Services Limited - India
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Eastern Energy - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Mercator Lines Limited - India
- Georgia Ports Authority, United States
- Ambuja Cements Ltd - India
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Chamber of Mines of South Africa
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Eastern Coal Council - USA
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Videocon Industries ltd - India
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Dalmia Cement Bharat India
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
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