Beijing coal ban another blow to Australia’s exports

By Neal Woolrich

China‘s decision to ban coal-fired power from Beijing and other major cities by 2020 grabbed headlines this week, although it is unlikely to have any meaningful impact on the country’s coal consumption.

However, even though the volume of coal exports is expected to rise by 2 per cent in 2015, the Bureau of Resources and Energy Economics is forecasting the value of sales to fall by 8. 4 per cent because of lower prices.

While the push towards clean energy has been one factor, analysts say the major issue for the coal industry has been over-supply.

Preliminary estimates suggest that Australia exported close to $40 billion of thermal and coking coal in the 2014 financial year.

Still, China‘s decision is one more piece of unwanted news for the battered and bruised Australian coal industry.

Photo: Australian coal production could be affected as export markets turn to other sources of energy.

It has the potential to be a major disruptor for the coal industry because it can generate power during the most profitable peak hours.

Prices for both thermal coal - used for electricity - and coking coal - an ingredient in steel production - are around a third and a quarter, respectively, of what they were in 2008.

“And I think the rub there is that the Australian coal industry is at the top end of the cost curve, so it’s these guys who should be making some serious decisions about closing supply,” he said.

Read more here: ABC


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