Promoting Resource Development
and Energy Security in Australia
Mr Greg Evans
Executive Director – Coal
Minerals Council of Australia
16 October 2014
Outline
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Government support for the Australian coal industry
Positive outlook for Australian coal trade
Coal remains central to Australia’s energy security
Recent policy decisions that will boost coal growth
Conclusion: long-term fundamentals for coal are sound
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Government support for Australian coal industry
• Prime Minister the Hon. Tony Abbott, MP
o “… since 1957, Australian coal, iron ore and gas has powered Japan’s prosperity;
and Japanese cars, consumer goods and electronics have transformed
Australians’ lives.”
o “It’s particularly important that we do not demonise the coal industry and if there
was one fundamental problem, above all else, with the carbon tax was that it said
to our people, it said to the wider world, that a commodity which in many years is
our biggest single export, somehow should be left in the ground and not sold.
Well really and truly, I can think of few things more damaging to our future.”
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Government support for Australian coal industry
• Energy Green Paper, released by the Hon. Ian
Macfarlane MP, Minister for Industry
o “Coal is one of Australia’s largest energy export resources, forecast to earn
$36 billion in 2014–15 … Australia’s success as a coal exporter has been based
on being a reliable and competitive supplier.”
• The Hon. Andrew Robb MP, Minister for Trade and
Investment
o “Today in Victoria’s Latrobe Valley, we see projects exploring new uses for brown
coal, such as one that could produce hydrogen for fuel-cells in a joint venture with
Kawasaki Heavy Industries … There are other high-value, non-energy uses being
investigated such as fertilizer feedstock, carbon fibre and carbon semiconductors.”
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Outlook for Australian thermal coal exports
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New research by Wood Mackenzie shows that Australian coal will
remain a major feature of seaborne trade.
Global demand for thermal coal will grow by more than 70 per cent
between 2014 and 2030, driven largely by electrification and industrial
expansion in Asia.
Most of the economies in developing Asia lack sufficient reserves to
meet increasing demand.
Australia is the second-largest exporter of thermal coal after
Indonesia. Australian exports are expected to show strong growth.
Wood Mackenzie considers that significant investment in new and
expanded infrastructure will be required in all export regions to meet
growing demand in the longer term.
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Outlook for seaborne thermal coal demand
While some nuclear capacity
is expected to return
gradually, coal will remain
the dominant source of
electricity generation in
Japan.
Outlook for seaborne thermal coal supply
Australian exports of
thermal coal will rise from
197 Mt in 2014 to 409 Mt in
2030, rising to approximately
25% of seaborne trade.
Outlook for Australian metallurgical coal exports
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Growing demand for steel from developing Asia will underpin rising
demand for metallurgical coal, driven by China and increasingly India.
The Pacific market will dominate metallurgical coal demand; however,
the Atlantic market will grow at a faster rate in the longer term.
Wood Mackenzie expects China’s demand for metallurgical coal to
peak by 2020, but India’s to continue to grow afterwards and partially
offset the overall demand slowdown in the Pacific market.
As with thermal coal, most of the economies in developing Asia lack
sufficient reserves to meet increasing demand for metallurgical coal.
Australia will continue to dominate seaborne trade, owing to its
proximity to demand centres and abundant high quality reserves.
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Outlook for seaborne metallurgical coal demand
Japan’s demand for
metallurgical coal, while
trending downwards over the
projection period, will
continue to account for a
significant share of world
seaborne demand.
Outlook for seaborne metallurgical coal supply
Australian mine expansions
are expected to capture
most of the forecast growth
in metallurgical coal
demand, as exports rise
from 175 Mt in 2014 to
almost 204 Mt by 2030.
Coal remains central to Australia’s energy security
Black coal and lignite (brown coal)
together account for 55 per cent of
registered generation capacity in
Australia, but supply 75 per cent of
output.
Source: Australian Energy Regulator
Coal predominant in Australia’s Eastern States
Black coal is the main source of
electricity generation for NSW and
Queensland; and lignite (brown coal)
the main source for Victoria.
Source: Australian
Energy Regulator
Recent policy decisions that will boost coal growth
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Repeal of the carbon tax.
Repeal of the Minerals Resource Rent Tax.
Retention of public support for carbon capture and storage.
Introduction of the Exploration Development Incentive.
Review of the mandatory Renewable Energy Target.
A renewed focus on deregulation and regulatory streamlining.
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Conclusions
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The Australian Government strongly supports our coal industry and
has recently made several sensible policy changes.
Wood Mackenzie predicts solid ongoing demand for Australia’s
thermal and metallurgical coal exports, including from Japan.
Wood Mackenzie also expects Australia to remain a leading exporter.
Coal continues to dominate Australia’s electricity mix.
The long-term fundamentals of the Australian coal industry are sound.
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