OPINION: Positive Prospects for Hunter Coal

August 31, 2016

Positive Prospects for Hunter Coal


In the Hunter, when mining hurts the community hurts. Whether it’s through job losses affecting mining families or reduced mining spending affecting supplier businesses, the tough market conditions for mining over the last few years has put a lot of pressure on the region.


The Hunter has faced these types of economic challenges before, including the loss of the steelworks in the mid 1990s. Like back then, the local economy has again proven to be resilient. The Hunter coal industry has also been resilient in the face of tough market conditions, maintaining strong production volumes to meet ongoing high demand and protect our global market share.


It’s been a hard few years, but we are starting to see some more positive signs for Hunter coal producers. The coal price has increased in recent months, providing a welcome boost. The Hunter’s coal mining operations are well positioned to build on these gains after a long and difficult period of bringing production costs down.


Demand for our coal also continues to be strong. The Hunter has exported over 51m tonnes of coal so far this financial year to February, up from 48m tonnes in the same period during previous year - a 7.7 per cent increase. So far in 2016 coal export volumes through the Port of Newcastle are also up compared to this time last year, and on current trends may even top the 150 million tonnes exported through the Port in 2015.


This ongoing high volume of coal shipped from Newcastle Port reflects the strong demand that is expected to continue into the future. The independent International Energy Agency (IEA) estimates that Australian coal exports will increase by 37% by 2040. In particular, the IEA has highlighted the likely growth in demand in our region, as electricity generation from coal-fired power across South East Asia will increase from 32% to 50%.


The IEA expects that Australia is likely to increase its share of the seaborne coal export market as a result of the new technology High Efficiency Low Emissions (HELE) coal-fired power plants being constructed across the ASEAN countries to our north.  A recent report by investment bank Morgan Stanley also predicted an increase in demand in the medium term for the type of high-quality, high-energy coal produced in the Hunter. It’s more evidence that as the coal price commodity cycle turns, our future prospects are positive. With the world’s largest coal export port and an efficient rail corridor, our Hunter coal can meet this ongoing demand, helping to grow economies across Asia and our local economy for decades to come.


To get the most benefit out of these opportunities we need to ensure that we have the right policies in place from our State and Federal Governments. Doing so will mean jobs and investment that will boost our economy and strengthen the fabric of mining communities across the Hunter and across NSW.

 

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