‘Digging a Deeper Hole for Coal’

first_img FacebookTwitterLinkedInEmailPrint分享Michael West for the Sydney Morning Herald:Has the government completely lost the plot? Why are they helping flood the market by backing the opening of 20 new coal mines? Why are they approving extensions everywhere when the price of coal has thudded through the floor?Anglo American has just announced a $US5.6 billion loss and put its coal and iron ore mines up for sale. Peabody is a seller. Goldman Sachs has just cut its long-term coal forecast to $US42.50 – a price at which few or no coal producers make money, ever.Yet even as the once great Anglo’s credit rating was cut to junk, Resources Minister Josh Frydenberg was enthusing at a National Press Club lunch on Tuesday about the bright future for Australian coal, a future fuelled by rising demand from India.What next from Canberra – are they contemplating a foray into the Eskimo market with an export drive in ice-blocks? Perhaps we could dispatch a trade mission to Chad and Niger to see whether they’d be interested in buying any of our nice Aussie sand.Tim Buckley, director of the Australasia Institute of Energy Economics and Financial Analysis (IEEFA), a green think tank, has been saying it for some time. Even so, the sheer pace of decline has surprised him. It is all happening faster than we anticipated, he told BusinessDay.“The seaborne coal industry is suffering both excessive supply and a faster than expected decline in global demand. Chinese coal net imports fell 11.6 per cent year on year in January 2016. This is the third year of declining import demand from China, given the 30 per cent decline over 2015 and the 11 per cent decline in 2014.”Worse still for Australian thermal coal exporters, says Buckley, India’s coal imports are down 16.5 per cent year on year in the 10 months to January 2016 (India works on a financial year end of March).“The rate of decline in Indian imports has accelerated with every month this new financial year, and runs contrary to the Australian government’s forecast of double-digit growth in Indian thermal coal imports.”Even ignoring carbon budgets and stranded asset risks, he says, a temporary greenfield mine moratorium across the NSW and Queensland coal export sector would clearly be in Australia’s own national strategic interest.“Coal export markets are in a state of prolonged oversupply. Adding more supply will only further depress the coal price Australian mines receive, and given the average coal export mine is only operating at a gross cash flow break-even position (before financing, stay in business capex and before funding mine rehabilitation costs or corporate taxes), approving even more supply will push the industry further into the red.”While still small in absolute terms, China’s coal exports actually rose 162 per cent yoy to 0.6Mt for the month of January.IEEFA forecasts net imports into China will fall 20 per cent yoy for 2016 overall, which would mark the third consecutive yearly decline in what was the world’s largest coal import nation globally in 2013. As the global seaborne coal sector continues to shrink, IEEFA expects China will become an opportunistic net exporter, further eroding the scope for any global pricing stability.Full article: Digging a deeper hole for coal ‘Digging a Deeper Hole for Coal’last_img

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