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Australian Coal Exports Booming

October 5, 2022

By Paul Homewood

 

h/t Dennis Ambler

 

 image

MELBOURNE, Oct 4 (Reuters) – Australian resources and energy export earnings are forecast to jump 7% to a record A$450 billion ($290 billion) this fiscal year, bolstered by soaring coal and gas prices in the wake of sanctions on Russia, the government said on Tuesday.

The country is set to see strong growth in revenue from exports of liquefied natural gas (LNG) as well as thermal coal used in power plants, the Department of Industry, Science and Resources said in a quarterly report.

That will offset declines in top export earner iron ore and metallurgical coal due to a downturn in steel making.

Thermal coal export revenue is expected to surge 35% to A$62 billion in the year to June 2023, overtaking revenue from metallurgical coal, forecast at A$58 billion. "It is expected that thermal coal prices will remain above metallurgical coal prices for some time — an unprecedented situation — and likely enduring while steel demand remains low and energy shortages persist," the report said.

It added that prices could climb even more than expected as wetter-than-normal conditions over the Australian summer may hamper supply.

Australian coal has increasingly headed to Europe instead of India since mid-2022 after European sanctions were imposed on Russian coal for its invasion of Ukraine, the government said. Cost-sensitive Indian buyers are turning to cheaper Russian and Indonesian supply.

https://www.reuters.com/markets/commodities/australias-resources-revenue-hit-record-amid-ukraine-conflict-2022-10-03/

As with oil, European sanctions on Russian coal appear to have backfired, with Russia simply re-routing its coal to Asia, and Europe paying a premium to get it eleswhere.

21 Comments
  1. Broadlands permalink
    October 5, 2022 1:11 pm

    Well, so much for the existential crisis of our time and the global climate emergency. Lowering CO2 emissions to zero by 2050 has been put on hold.

  2. October 5, 2022 1:41 pm

    When it’s a choice between surviving the winter and indulging in climate vanities, guess what wins.

  3. bobn permalink
    October 5, 2022 1:41 pm

    Keep buying coal mining company stocks. Even in the coming recession the coalminers will make you money.

  4. Jack Broughton permalink
    October 5, 2022 1:44 pm

    Would be great to be Australian, American or Norwegian at the moment …. oh how the money rolls in, rolls in! Hows about if we did a Putin and claimed them as historically British territories?

  5. October 5, 2022 2:00 pm

    “As with oil, European sanctions on Russian coal appear to have backfired, with Russia simply re-routing its coal to Asia, and Europe paying a premium to get it elsewhere.”

    Exactly, these sanctions are just a virtue signaling exercise that anyone with rational thinking sense or can just look at the past could have seen would backfire as previous sanctions and prohibitions (e.g the war on drugs) have never had this effect. It was obvious it would increase the cost of fossil fuels previously imported from Russia so Russia likely get the same income selling less. I has also exposed the racist arrogance & hypocrisy of many in the western political class (who love to call others particularly the white working class racist) particularly towards how India and African nations who could see the negative effect these sanctions would have on their cost of living & the wellbeing of their populations especially I have to get into a bidding war with Western nations for fuel & food – no one want to be the next Sri Lanka.

    The only example I’m aware of which has changed the behavior of oil/fossil fuel exporters has being the 1980s oil glut (where oil price adjusted for inflation eventually returned to <1973 levels) where was caused by a combination of fuel switching – coal & nuclear replacing oil in electricity generation, more fuel efficient cars and an increase in production not part of OPEC e.g. North Sea & Alaska.

    What Western nations need to do is all get together (also include LEDC as they will only turn to China or Russia otherwise):

    1) expand local production of coal, oil & natural gas (including removing hypocritical bans on shale gas)

    2) Criminally investigate politicians & civil servants who have personally benefited financially from bad energy policy for misconduct in a public office & corruption – how many have to have conflict of interest for something to be done? Especially look at Germany & Belgium nuclear phase-out.

    3) Address misleading advertising e.g 100% renewable energy tariffs & scandalous general ignorance to civil engineering (especially the electricity system) & agriculture (abuse toward people who do understand this) by making the basics a requirement during secondary school education for at least a year to learn how a farm works (actually visit them), why some land is better being using raising animals for food (the fact humans are omnivores & would suffer some nasty nutritional deficiencies without animal products) and how farmers grow crops (fertiliser/haber bosch process, why pesticides are used & irrigation + how arbitrary organic farming rule actually are) I would also want anyone wanting to run for parliament or going to university to feel they have to do the same.

    4) design & build a modular version of an existing (a thorium based reactor is a medium project) nuclear reactor design (a version of a PWR using a nuclear submarine as an example) that can be mass produced in a factory put onto ship or build as a floating reactor that can be used as a combine heat (which can be used to drive absorption cooling) & power system with the waste heat running a Cold district heating system. https://en.wikipedia.org/wiki/Cold_district_heating.

    5) Require large scale infrastructure changes to have feasibility studies and properly tested prototypes – No faith and wishful thinking like with energy storage that does not exist with current technology (why are so many place building wind & solar when this issues has not being addressed and are shocked it doesn't work).

    • bobn permalink
      October 5, 2022 2:30 pm

      Come on Zed, stop all this logical common sense.

      • October 5, 2022 3:23 pm

        You just know that politicians will do precisely the opposite of these very sensible ideas.

    • David Wild permalink
      October 5, 2022 4:51 pm

      RE item 4, Rolls Royce are well advanced on building a Small Modular Reactor (SMR) based in their submarine expertise. RR began design work on the SMR c. 2015. Their plan is for a 470 MWe design. See https://www.rolls-royce-smr.com and https://en.wikipedia.org/wiki/Rolls-Royce_SMR. They are working with partners so that the site can be ready in advance, and the reactor delivered in units by lorry. I have read that their unit power cost is likely to be less than Hinkley C…..and it may be ready sooner.
      Another UK option is Moltex, from Swindon, whose reactor design based on using molten salt instead of pressurised water. This would have the advantage of being able to draw on the salt to ramp up quickly. Their prototype is being built in New Brunswick, Canada – part financed by the Canadian Government.

      • catweazle666 permalink
        October 5, 2022 6:32 pm

        This is interesting too:

        https://www.theengineer.co.uk/content/news/moltexflex-to-launch-new-uk-nuclear-reactor/

      • catweazle666 permalink
        October 5, 2022 6:33 pm

        That’s in Warrington, incidentally!

      • daveandsharonw@gmail.com permalink
        October 5, 2022 10:30 pm

        Thanks for the feedback.

        I hadn’t picked up that Moltex had set up a development shop in Warrington.

        They started in Swindon, but can’t find any reference at present

        They seem to have boomed since getting £50M from Canada.

        I would be surprised if RR weren’t a bit ahead, since they are repurposing an existing product that has been around for a long time

        I am shortly meeting a (just retired) very senior nuclear engineer, and have a bucket of questions for him

        Cheers

        Dave Wild

      • Stuart Brown permalink
        October 5, 2022 7:42 pm

        Rolls Royce… possibly, but they have to get it approved. The approval process takes 5 years. This is still the full output from the Office of Nuclear Regulation on their website:

        “We have been asked by The Department of Business, Energy and Industrial Strategy (BEIS) to begin a Generic Design Assessment (GDA) for Rolls Royce SMR Ltd’s 470MW Small Modular Reactor design.

        BEIS made the request to the ONR, Environment Agency and Natural Resources Wales following its readiness review of the Rolls Royce application.

        This review concluded that the design is ready to enter the GDA process. The assessment will begin once the necessary arrangements around timescales and resources have been put in place.”

        They were asked in April. The mills of the gods grind slowly… Moltex aren’t even candidates for the list.

  6. It doesn't add up... permalink
    October 5, 2022 2:23 pm

    Not sure your conclusion is quite right. Australian coal prices are at a premium ($400/tonne) to prices in Europe ($300/tonne) because Asian coal demand has rocketed as Asian countries economise on LNG that can be sold to Europe at a huge profit. European prices are affected by the shipping backlog up the Rhine following the period of low water levels.

  7. John H permalink
    October 5, 2022 2:29 pm

    Pity we don’t have a government bold enough to defy the climate scaremongers and start using the millions of tons of coal that’s here under our feet.

    • Harry Passfield permalink
      October 5, 2022 3:33 pm

      John, as far as am aware, Albanese, the OZ PM has already declared his wish that Aussie coal should be stopped. Must see if I can find the original report….

      • Thomas Carr permalink
        October 5, 2022 3:40 pm

        Try Sky News Australia. Numerous articles in the Australian edition of The Spectator . You may be able to access one without having to subscribe. The Spectator despairs of the Greenies.

  8. Devoncamel permalink
    October 5, 2022 5:19 pm

    Here’s an idea, convert a well known power station in Yorkshire to burn coal. Even the BBC admits it produces less CO2 than er…wood.

  9. Bob Webster permalink
    October 5, 2022 6:49 pm

    Nice that the Aussies aren’t run by a bunch of imbeciles who never ran a business in their lifetime (such as those making policy in the USA).

    What the imbeciles in DC don’t seem to understand is that not using fossil fuels in the USA will prolong our supply for when the adults are back in charge of policy-making.

    Sabotaging Russian pipelines will hurt Europeans dependent on Russian gas more than it will hurt Putin’s Russia.

  10. Micky R permalink
    October 5, 2022 7:48 pm

    What are the logistics of transporting power station coal from Canada? Most of Canada’s thermal coal is mined in the west of the country, and it’s a big country to cross to the Atlantic coast.

    • It doesn't add up... permalink
      October 5, 2022 9:08 pm

      Probably export Canadian coal to Asia which then buys less from South Africa which switches supply to Europe. It was always expensive shipping ANS from Valdez to the US Gulf refineries, although New Panamax does allow larger ships which might make the route economic. I doubt rail to the St. Lawrence seaway would be competitive.

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