Policy settings must support coal industry
NSW is blessed with high quality coal and growing demand in our region.
Every day in NSW more than 22,000 hard working men and women put on their hi-vis shirts and hard hats and go to work at one of the most arduous jobs around, a job that contributes so much to the state — coal mining. Tens of thousands more also work in thousands of NSW businesses that supply goods and services to our coal mining operations.
Unlike other states, most of our NSW mines are close to local communities. This means many of our miners live in the towns near where mining takes place. They shop at the local supermarket, eat at the local cafes, their kids play for the sports team on the weekend. They are major contributors to the fabric of their local community.
It’s these real people and real families who are often overlooked during policy debates in the parliament or in the media about issues relating to coal mining.
In NSW, coal is as critical to the economy as it is to those who work in the industry. As well as providing tens of thousands of jobs, coal is our most valuable export and provides the lion’s share of the over $2 billion in mining royalties the government receives each year. And our power stations contribute around 80 per cent of our state’s electricity using high quality thermal coal mined nearby.
It’s the quality of our NSW coal that is driving good business conditions that are expected to continue into the future. Right now the NSW coal sector is in a sweet spot, with high commodity prices and exports at or near record levels, driven by strong demand for our thermal and coking coal from traditional and emerging markets.
The most recent report from the highly respected and independent International Energy Agency forecast continued strong growth in Asian demand for our coal through to 2040, driven by urbanisation of the region’s population and the increased use of new low emissions coal-fired power stations to meet their growing energy needs. This presents opportunities for our high quality thermal coal as well as our metallurgical coal used for making steel.
Under the IEA’s New Policies Scenario, which incorporates commitments made under the Paris Agreement, the IEA estimates that while global growth in coal demand remains steady, growth in demand in the Asia Pacific will more than double, increasing by 492 mtce (million tonnes of coal equivalent) by 2040.
According to the IEA Report, “Many developing economies view coal as important to their economic development because of its ready availability and relatively low cost. India and Southeast Asia are the growth centres for coal use in the New Policies Scenario, with demand more than doubling over the period to 2040.”
Strong demand is also expected from our long-established trading partners, including Japan, Taiwan and Korea. Late last year the Japanese ambassador to Australia, Sumio Kusaka, told a conference in Brisbane that Japan would continue to buy coal from Australia to secure its energy needs into the future, saying “Japan seeks to further strengthen cooperation with Australia to ensure the stable supply of coal moving ahead.”
The NSW Minerals Council recently released our Economic Impact Survey for the 2017-18 financial year which found mining companies injected $10.7bn into the state economy. The survey showed that in coal mining regions across NSW, mining operations were delivering more jobs and supporting more local businesses than the previous year.
Given the importance of the coal sector to the state economy and to families and communities across NSW, whoever wins the state election will need to support further industry growth. This will be critical to ensure we can meet the growing demand from our traditional and emerging markets, and continue to provide jobs and economic benefits to our state.
Right now there are 19 coal mining projects in various stages of the NSW planning and approval process, including new projects and extensions and modifications of existing operations.
If these projects are all able to proceed, they will collectively deliver over $5.3bn in capital investment, support around 9000 jobs and deliver billions in additional royalty payments.
Without a stable and certain policy environment that supports the mining sector, the economic benefits will be lost to NSW. New jobs and investment will go elsewhere, potentially to other states where governments are actively pursuing new mining investment.
NSW is blessed with high quality coal and growing demand in our region. The future of the mining industry and our communities is linked to our ability to meet the growing demand. This will require policies that support our coal export sector as well as our hard-working miners, their families and businesses right across NSW.
Stephen Galilee is CEO of the NSW Minerals Council.