QUEENSLAND Resources Council (QRC) CEO Michael Roche projects strong demand for coal will cause headaches for the Queensland coal industry beyond 2010.
“Given the projected strong global demand for coal, it’s likely that historical growth rates will continue well beyond 2010,” Roche told Australian Mining.
“In the light of this growth, we expect that global coal supply chains will continue to be posing challenges at the end of the decade,” he said.
Roche said capacity constraints are a certainty for the coal industry.
“By 2010, we will have moved onto a different set of constraints, bottlenecks and frustrations,” he said.
“The coal industry’s natural enthusiasm to expand and reap the benefits of high commodity prices is tempered by the fact that these supply chain investment are not incremental; they require billion dollar chunks of capital with all volume risk directly worn by coal producers.
“If Queensland coal producers build too far in advance of demand, they’re giving away margins to competitors from other coal provinces around the world.”
Roche made the comments after Australian Mining released the results of a reader poll, where 61% of industry professionals said coal supply chain bottlenecks will not be solved by 2010.
“In the wake of the recent review of the Goonyella coal chain, jointly commissioned by QRC and the Queensland Government, a number of systemic issues in the coal chain have been identified,” he said.
“QRC is confident that Queensland is on the right track for maximising the coal throughput of existing coal supply chains and identifying the best expansion paths to satisfy future demand.”