Rio Tinto chief executive Tom Albanese has warned that continued congestion at the Port of Newcastle is a danger to the future of Australia’s coal exports to Asia.
He said his company’s Australian coal production was not running at its full capacity because of logistical hurdles in getting the coal exported.
“We should remind ourselves that Australia is not the only source of supply for the Asian seaborne market, so if the coal chain does not pick up, others will find their way to that market,” he said at yesterday’s annual Australian investors meeting.
According to Albanese, unless Australia does a better job of easing congestion and streamlining coal exports it risks losing market share to coal from Mongolia and China.
“Coal from Mongolia to China is happening. It is expanding, probably doubling every two years,” he said.
“Will that coal get to the seaborne markets? I suspect it will.
“Will it get to the seaborne markets at a lower delivered cost than Australian coal? I suspect it will too.”
Mongolian coal explorer Xanadu Coal’s director Brian Thornton agreed with Albanese’s assessment.
“It’s a fair comment,” he told Australian Mining on his way to the annual Discover Mongolia conference in Ulaan Baatar.
Mongolia shares a border with China, and has upwards of 150 billion tonnes of coal which is being developed as we speak, Thornton said.
It has the potential, over the next few years, of being a huge threat to Australia’s thermal coal exports, although not so much coking coal. There are currently four to five projects underway, Thornton added.