Export surge tipped as Asia eyes coal

Thermal coal imports into the Asia-Pacific region will surge to 1.1 billion tonnes a year over the next decade.

 

Thermal coal imports into the Asia-Pacific region will surge to 1.1 billion tonnes a year over the next decade, with demand from developing nations delivering long-term lifelines for the Hunter Valley and central Queensland.

With Australian exports of thermal and metallurgical coal hitting $54.6bn in 2019-20 — contributing 11.5 per cent of the country’s total export revenue — a new 10-year outlook predicts a rush of demand from India, Vietnam and The Philippines.

A Commodity Insights report, commissioned by the Minerals Council of Australia, shows ­demand for thermal coal in Asia will increase by 275mt by 2030, following a 173 per cent spike ­between 2006 and 2019.

The demand outlook will buoy investment opportunities in emerging high-quality thermal coal zones, including the Gunnedah and Galilee basins, and support existing operations in the Hunter Valley and Bowen Basin.

The Commodity Insights analysis says key drivers of the thermal coal boom include high electricity demand growth across developing nations, high population growth in India and Southeast Asia and the commissioning of coal-fired generators.

An inability of domestic coal production to keep pace with ­demand growth for high-quality thermal coal in Asia was also fuelling the appetite for Australian ­resources.

“While past performance is no guarantee of future performance, these fundamental drivers remain and suggest thermal coal demand growth will continue for some time yet,” the report says.

“The developing regions of Asia — China, India, Thailand, Vietnam, Indonesia, The Philippines, Pakistan and Bangladesh — all have low levels of per capita electricity consumption. The most developed of these — China — has a consumption level half of Japan’s and a third of the USA’s.

“India’s per capita consumption level is only one-tenth of Japan’s, and Bangladesh’s is less than one-twentieth of Japan’s.”

By 2030, India will rival China as the biggest importer of thermal coal. China, Japan, Malaysia, Taiwan and Thailand are forecast to maintain steady growth in thermal coal demand. Demand in Korea will drop as it moves towards hydrogen and renewables.

Developing nations, including Vietnam and The Philippines, are forecast to record considerable growth in thermal coal imports.

MCA chief executive Tania Constable said increasing thermal coal demand from Asian countries would challenge regional targets in meeting Paris Agreement goals.

The MCA — whose members, including BHP, have moved to reposition their thermal coal ­assets — has been forced to take a more aggressive climate change position in recent years.

Ms Constable said the rapid ­development of low-emissions technologies, renewables, gas and nuclear power would be critical in modernising energy sources in ­developing countries.

“Australian thermal coal is amongst the highest quality in the world, enabling more energy to be produced with less CO2 emitted per kWh of electricity produced than most alternative sources,” Ms Constable told The Australian.

“It is critically important to achieve global net zero emissions, and there are clearly challenges ahead in the Asia-Pacific region in relation to emissions reduction, requiring consideration of low-emissions technologies such as CCUS, renewables, gas and ­nuclear power to meet Paris Agreement goals.”

Resources Minister Keith Pitt said the report confirmed that coal would remain a major export and economic contributor “for many years to come”.

He said the surge in thermal coal demand would be helped by new emissions-reducing technology.

“As this technology is increasingly adopted around the world, it will create new opportunities for our coal,” he said. “Coal produced in the Hunter is already recognised as world’s best quality and new projects, like Adani getting under way in the Galilee Basin, are attracting international interest. Combine this with Australia’s reputation as a reliable and stable exporter and the future remains positive for Australia’s thermal coal.”