Friday, 11 March 2016


Why are some Australian Governments ignoring the writing on the wall about the future of coal?

Just recently federal Resources Minister Josh Frydenberg gave a very upbeat assessment for coal in an address to the National Press Club. 

The governments of both NSW and Queensland obviously share his optimism.  In these two states almost 20 new coal developments are being considered by their mining departments. These proposals include Adani’s Carmichael in the Galilee Basin, and Shenhua’s Watermark and BHP’s Caroona on the Liverpool Plains as well as other mines in the Hunter and Wollongong areas.

In addition there are also requests for the expansion of existing mines.

Given the current price of coal and the continuing decline in our export markets, this optimism seems nonsensical.

According to business columnist Michael West:  “That, at a coal price 0f $US52 a tonne [the price at the end of December], half of the coal industry is in the red at the gross level suggests nobody globally is making a profit at the net level.

“There are mines for sale everywhere, yet here are the governments of NSW and Queensland backing new mines all over the place.”

Highlighting the poor financial situation of the coal sector, peak mining body the Queensland Resources Council wants government support.  “Its chief, Michael Roche, denies this means subsidies, but subsidies are precisely what they are chasing: lower council rates, royalty breaks, tax breaks, discounts from rail and port operators,” said Michael West.

In addition to the low price for coal there has been a decline in demand.  Net Chinese coal imports declined over the last three years.  While Minister Frydenberg is pinning his hopes on India, imports from that country are also declining.

Tim Buckley, Director of the Australasia Institute of Energy Economics and Financial Analysis (IEEFA), thinks it would be sensible to have a temporary moratorium on new coal mines.  He points out that this would be in the national interest because coal mines currently are in a state of over-supply.

As well as the glut, other issues with coal include climate change and stranded assets.
-          Leonie Blain 
This post originally appeared in the VOICES FOR THE EARTH column in The Daily Examiner on 29th February, 2016.