Opportunities for Australia from robust Asian thermal coal demand

Australia’s world-class coal mining industry can create more jobs in Australia and strengthen the economy by meeting expected strong Asian demand for thermal coal over the next decade and beyond.

A report on the demand outlook for thermal coal in our region from expert industry analysts Commodity Insights forecasts strong appetite for thermal (energy) coal across existing and emerging Asian markets between now and 2030.

Strong electricity demand growth in Southeast Asia and India driven by industrialisation and urbanisation, use of high efficiency low emissions (HELE) coal technologies and solid population growth will drive a potential 400 million tonne (Mt) increase in annual demand by 2030.

Most of this growth is expected from countries that are existing customers of Australia’s high-quality coal, including Japan, China, Taiwan and Korea, as well as newer buyers
such as Vietnam, the Philippines and Thailand. Asian thermal coal import demand is expected to grow over 400Mt over the period (or double Australia’s total 2017 thermal coal exports of 200Mt) from 740Mt in 2017 to 1147Mt in 2030.

Demand growth is evenly spread across the region, with all countries except Japan increasing imports across the period and growth in Chinese demand remaining relatively flat.

An increase in coal’s share in the power generation mix in large parts of Southeast Asia will help countries diversify beyond gas and hydro power.

Imports by India will also increase as forecast domestic production will not be able to keep pace with demand growth, especially for coal-fired power plants built away from the domestic production centres.

Australian coal is ideally placed to meet this growing demand from Asian customers because of its high quality – reducing emissions when compared to lower-quality coal from other exporters – and supplier reliability.

We are also close to key markets and have good infrastructure availability.

Future challenges include the need for Australia to add or expand mines and infrastructure, particularly rail, in a timely fashion to support this growth.

Approval processes for new mines are long and costly and involve numerous stakeholders and levels of government. The report notes that: ‘The sheer volume of red and green tape is extremely onerous, and possibly out of balance with other jurisdictions.’

Better policy settings would help the industry grow to meet the expected demand increase and deliver continued benefits to Australians, such as large royalty payments to taxpayers in NSW and Queensland.

HELE and CCS power generation efficiencies graph

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