Coal producers in NSW and Queensland are well placed to take advantage of the ongoing demand for coal from our near neighbours as global consumption in 2024 rose to an all-time high of 8.77 billion tonnes.
According to data from the International Energy Agency, this represented a 1.2% increase in consumption on the previous year – global demand for coal keeps rising.
Despite some of the views presented as facts, these figures hardly speak to a commodity that is on life support. And while some people continue to campaign for an end to coal production, doing so would have no impact on global demand.
NSW and Queensland would simply deal itself out of billions of dollars’ worth of prosperity. Many communities across the state depend on the sector for employment and revenue.
Look at Queensland, I was recently in Moranbah and having boarded my flight in Brisbane at 4.50am, you couldn’t help but notice that the first four or five domestic flights that morning were all headed to coal mining central. That alone speaks to the importance of the coal sector – it remains Queensland’s most valuable export, and is an economic driver of jobs, investment, communities and the many associated businesses which thrive on coal mining.
Take NSW. In 2023/24, coal royalties generated $3 billion for the state’s economy and are forecast to top $13 billion over the next four years.
Imagine if that revenue was suddenly no longer available to NSW coffers – there would be impacts to roads, schools, hospitals, and law and order; to name but a few.
You only need to see the procession of ships off Newcastle port or the trains snaking their way through the Hunter to understand the significant economic impact of coal in NSW.
Near neighbours in Asia such as India, Japan, China, and South Korea continue to demand Queensland’s top quality thermal and steel-making coal – it is vital to the economic prosperity of these countries, and we can feel proud knowing that not only is Queensland coal delivering jobs and prosperity here, but also across the Asia Pacific.
When it comes to generating electricity, there is no developed and prosperous nation around the world that is energy deficient. It underpins everything.
Domestically, thermal coal continues to do the heavy lifting in our own energy mix – for the 2023 calendar year, 62.3% of the electricity generated in Queensland was from coal.
In NSW, coal accounted for 62.8% of the overall energy mix, while in Victoria it was 57.7%. Coal remains key to delivering reliable and affordable baseload power.
These are the facts – and if you want the source; it is no less than the Department of Climate Change, Energy, Environment and Water.
This only serves to underline why respective state governments in NSW and Victoria have extended the lifespan of key coal-fired power generators – the Eraring plant in NSW still provides 20% of the state’s electricity.
And that is why the coal sector is still so important – but of course there are challenges.
The approvals process for mine extensions and expansions has become increasingly complex; and even if a proponent is successful, the project still needs to run the gauntlet of Commonwealth approvals.
The emissions profile of projects has come into sharper focus in NSW, while the Commonwealth’s Safeguard Mechanism is imposing increasing costs on producers. In Queensland, the previous government’s decision to impose the world’s highest royalty regime on the coal sector, without consultation, has created uncertainty for investors and a sovereign risk where Japanese partners have taken a strategic stake in mine operations in Queensland.
This creates uncertainty for investors, and no one should ever underestimate the intensive capital requirements of these projects – if it was simple and risk-free, everyone would be doing it.
Coal mining operations are long-term plays, well beyond one or even two electoral cycles, and with all manner of potential pitfalls including regulatory changes, royalty tweaks, weather events and geo-political events.
By the time you factor in fluctuating coal prices and foreign exchange rate movements, the risks continue to mount.
Our producer members accept these risks, and that is very good news for both NSW and Queensland because without these projects, thousands of direct and indirect jobs would be lost, along with corporate and payroll taxes, royalty revenue, investment, and prosperity.
That would be a very high price for us to pay.
Stuart Bocking
CEO, Coal Australia
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