IEA and NSW Government at odds on thermal coal future

An Institute for Energy Economics and Financial Analysis (IEEFA) report has taken a dim view of New South Wales’ thermal coal exports, believing they are on an irreversible downward trend.

The International Energy Agency (IEA) forecasts that South East Asia and India will lead global thermal coal demand to 2040, but trade volumes will drop 59 by per cent by 2040.

“Under this analysis — IEA’s Sustainable Development Scenario (SDS), coal trade volumes will plummet to 309 million tonnes coal equivalent (Mtce) in 2040 from 756Mtce in 2016, a compound annual decline of 3.7 per cent,” it said.

“Compared to this, the NSW Government’s long-term forecast from its 2016 Intergenerational Report that coal volumes will increase 1.2 per cent per annum for the next 40 years looks hopelessly out of date.”

The IEA findings are in opposition to the more positive view espoused by the NSW Minerals Council.

A Commodity Insights report earlier this year forecast strong demand for Australian thermal coal in current and emerging Asian markets that could increase thermal coal demand significantly over the next few years.

The report estimated that demand for thermal coal would increase from 740Mt in 2017 to 1.15 billion tonnes in 2030.

Markets such as Japan, South Korea and Taiwan are strong traditional markets for thermal coal, and thermal coal exports to Japan have risen by 2.4 per cent from December 2016–December 2017 to 64.3Mt.

In June, NSW Minerals Council chief Stephen Galilee said it confirmed “strong future prospects for NSW coal exports due to a significant increase in Asian demand for thermal coal for power generation, providing an opportunity for more NSW mining jobs, higher sustained NSW mining royalties and lower global emissions.

“It should also be understood that failure to grasp this opportunity will mean thermal coal will be supplied by others, resulting in less NSW jobs, less NSW mining royalties, and potentially higher global emissions from low quality coal.”