The Australian coal industry is facing an array of cost and competitive pressures, however new modelling from RepuTex indicates that ongoing investment in the coal sector will continue to drive production for the best part of the next decade, with output and resultant carbon emissions forecast to rise to record levels.
Carbon pricing is just one of a series of cost and competitive pressures the Australian coal sector is facing. Increased competition from cheaper south-east Asian suppliers, combined with the high Australian dollar is making Australian coal less competitive internationally, and higher domestic wages ensure local producers operate at a cost disadvantage.
Add into the mix the Minerals Resources Rent Tax (MRRT) and the Government’s Carbon Price Mechanism (CPM) from July 2012 and the coal industry is quite literally between a rock and a hard place.
In spite of these factors, an examination of the industry’s investment pipeline shows that far from slowing down in the face of these pressures, Australia’s coal sector production is set to grow.
Australia’s likely low carbon price trajectory beyond 2015, combined with industry compensation via the Government’s Coal Sector Jobs Package (CSJP) and an anticipated spike in demand from Asia mean that many coal projects are able to absorb these new liabilities. In fact, several major new developments have proven viable investments, in spite of the fact that new mines built post-July 1 2012 are not even eligible for CSJP assistance.
The nation’s two largest coal mines yet built – Xstrata’s Wandoan Coal Mine and Hancock’s Alpha Project, are set to commence operation in Queensland from 2015. The scale of these operations will contribute to a steady rise in coal production, and emissions.
RepuTex forecasts Xstrata’s new Wandoan open cut operation will increase its production from 6 million to 25 million tonnes between 2016 and 2018, resulting in an output of 1.2 mt of C02-e over the same period. Meanwhile Hancock’s Alpha open cut project will have a larger role to play, with 30 million tonnes of coal output forecast per year, leading to an additional of 0.7mt CO2-e of direct emissions per year.
Hancock’s Alpha Project
Xstrata’s Wandoan Coal Mine
In total, these two new projects will lead to demand for an additional 1.1milion permits within the Australian carbon market, with coal industry emissions peaking in 2018, beyond which …
Source: http://www.reputex.com/publications/investment-in-coal-continues-but-emissions-to-peak-in-2018/
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Press Release Source: http://www.investbrisbane.com.au/Corporate/Media/News/2012/6/Investment%20in%20coal%20continues,%20but%20emissions%20to%20peak%20in%202018
