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Researched by Industrial Info Resources Australia (Perth, Australia)--The coal market has been swamped in chaos during the last 12 months. Coal prices soared from about $50 to more than $200 a ton between 2005 and 2008, but have since declined to less than $70 per tonne as a result of an increase in global supply and lower demand from China. The Coal Industry has been forced to restructure its workforce in order to remain viable for the future, with some sources estimating that more than 2,500 jobs were cut this year in Australia as mining companies downsized operations or shut them permanently.
Australia's Bureau of Resources and Energy Economics (BREE) said the country exported 181 million tonnes of metallurgical coal during 2013-2014, with this expected to increase to 185 million tonnes in 2014-2015. Thermal coal exports are tipped to top 196 million tonnes in 2014-15. These figures suggest that Australia's coal exports will increase despite the commodities' low rate of return.
Not only is there already an oversupply in the market, but further supply is coming online from other competitors, such as Indonesia, Colombia and South Africa. Moreover, increased natural gas production in the U.S. will encourage coal to be diverted from domestic markets to new international destinations. Sadly for Australia, oversupply of both products on the market is likely to force the coal price to remain low and possibly decline. Interestingly, the low price of coal has begun to trigger interest in buying cheap assets, which some experts say is in anticipation of an eventual market pick-up that is expected to occur by 2016. Japan, which is the world's second-biggest coal importer behind China, has begun to take advantage of the situation. The country's confidence is a sign that coal demand in markets such as India will remain strong in years to come, particularly as high-cost operations continue to close across Australia and new coal-fired power stations come on-stream in key Asian markets. Some experts have suggested that these factors alone will result in a rebalancing of the global coal market by as early as 2016.
There are a number of major coal projects that are set for completion by that time, including Whitehaven Coal Limited's (Sydney, Australia) $683.3 million Grassroot Maules Creek Coal Mine & Processing Plant, which aims to produce more than 13 million tonnes per year of coking coal. Additional production capacity is also sought in anticipation for the market rebalance, with the $534 million Ulan Coal Mines Limited's West Coal Mine Expansion increasing its production by 10 million tonnes. Ulan Coal Mines (Mudgee, New South Wales) is a joint venture between Xstrata Coal Pty Limited (Zug, Switzerland) (90%) and Mitsubishi Development (10%), a subsidiary of Mitsubishi Group (Tokyo, Japan). Similarly, the $445.4 million Boggabri Coal Mine Expansion in New South Wales aims to produce a further seven million tonnes of coal for export. Boggabri Coal Pty Limited is owned by Idemitsu Kosan (Tokyo).
Industrial Info estimates that in 2015 and beyond, more than $67.33 billion will be invested in the Australian Coal Industry. Queensland is responsible for the largest percentage of that total, with more than $52.12 billion of projects planned for completion in the coming years. New South Wales remains a distance second, $11.47 billion worth of projects expected to be completed by the time of the expected coal market restructure in 2016.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Australia's Bureau of Resources and Energy Economics (BREE) said the country exported 181 million tonnes of metallurgical coal during 2013-2014, with this expected to increase to 185 million tonnes in 2014-2015. Thermal coal exports are tipped to top 196 million tonnes in 2014-15. These figures suggest that Australia's coal exports will increase despite the commodities' low rate of return.
Not only is there already an oversupply in the market, but further supply is coming online from other competitors, such as Indonesia, Colombia and South Africa. Moreover, increased natural gas production in the U.S. will encourage coal to be diverted from domestic markets to new international destinations. Sadly for Australia, oversupply of both products on the market is likely to force the coal price to remain low and possibly decline. Interestingly, the low price of coal has begun to trigger interest in buying cheap assets, which some experts say is in anticipation of an eventual market pick-up that is expected to occur by 2016. Japan, which is the world's second-biggest coal importer behind China, has begun to take advantage of the situation. The country's confidence is a sign that coal demand in markets such as India will remain strong in years to come, particularly as high-cost operations continue to close across Australia and new coal-fired power stations come on-stream in key Asian markets. Some experts have suggested that these factors alone will result in a rebalancing of the global coal market by as early as 2016.
There are a number of major coal projects that are set for completion by that time, including Whitehaven Coal Limited's (Sydney, Australia) $683.3 million Grassroot Maules Creek Coal Mine & Processing Plant, which aims to produce more than 13 million tonnes per year of coking coal. Additional production capacity is also sought in anticipation for the market rebalance, with the $534 million Ulan Coal Mines Limited's West Coal Mine Expansion increasing its production by 10 million tonnes. Ulan Coal Mines (Mudgee, New South Wales) is a joint venture between Xstrata Coal Pty Limited (Zug, Switzerland) (90%) and Mitsubishi Development (10%), a subsidiary of Mitsubishi Group (Tokyo, Japan). Similarly, the $445.4 million Boggabri Coal Mine Expansion in New South Wales aims to produce a further seven million tonnes of coal for export. Boggabri Coal Pty Limited is owned by Idemitsu Kosan (Tokyo).
Industrial Info estimates that in 2015 and beyond, more than $67.33 billion will be invested in the Australian Coal Industry. Queensland is responsible for the largest percentage of that total, with more than $52.12 billion of projects planned for completion in the coming years. New South Wales remains a distance second, $11.47 billion worth of projects expected to be completed by the time of the expected coal market restructure in 2016.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
