Australia s Coal Industry: Short-term challenges, long-term opportunities

Transcription

1 SIEW Roundtable The Resurgence of Coal: Trends and Challenges Australia s Coal Industry: Short-term challenges, long-term opportunities Dr John Kunkel Deputy CEO Minerals Council of Australia

2 Australia has significant coal reserves Top ten national shares of proven world coal reserves as at December 212 (Mt & %) 2

3 Coal production and consumption Top 1 producing countries, Thermal coal (Mt) Production Consumption 6 Metallurgical coal (Mt) Production Consumption Source: IEA Coal Information 212 3

4 Major Australian Coal Basins 4

5 Australia s coal exports AUD$bn Black coal exports AUD$bn (LHS) Coal share of total exports (RHS) % 6 Coal share average 8-9 to = 15.3% Coal share average 3-4 to 7-8 = 1% Source: Bureau of Resources and Energy Economics, Australian Government. 5

6 Key export markets for Australian coal Metallurgical coal Thermal coal Japan Japan China China India South Korea South Korea Chinese Taipei Chinese Taipei AUD $m AUD $m Source: Bureau of Resources and Energy Economics, Australian Government. 6

7 Australia s electricity generation fuel mix Wind.2% Hydro 7.1% 1-2, Coal = 77% , Coal = 69% Other 1.5% Black coal 51.9% Wind 2.4% Hydro 5.5% Other 3.7% Black coal 47.4% Gas 14.1% Gas 19.3% Brown coal 25.1% Brown coal 21.7% Source: Bureau of Resources and Energy Economics, Australian Government. 7

8 Australian thermal coal on the global cost curve Seaborne thermal coal cost curve (9) Seaborne thermal coal cost curve (213) FOB cash cost (US$/t) 9 - energy adjusted In 9, the Australian In average 9, the cash Australian cost of US$42.9 average placed cash it cost in the of 44th US$42.9 percentile. placed it in the 44 th percentile. FOB cash cost (US$/t) energy adjusted In 213, average Australian cash cost are, at US$74.2, in the 75 th percentile Cumulative production (Mt) Cumulative production (Mt) Australian mines Other Global mines Australian mines Other Global mines Source: Wood Mackenzie, 7 May 213 8

9 Australian metallurgical coal on the global cost curve Seaborne metallurgical coal cost curve (9) Seaborne metallurgical coal cost curve (213) FOB cash cost (US$/t) Average Australian cash costs in 9 were US$62.6, putting the average Australian mine in the 42 nd percentile. FOB cash cost (US$/t) In 213, the competitive position has deteriorated somewhat, with the average mine having cash costs of US$17.4 (5 th percentile) Cumulative production (Mt) Cumulative production (Mt) Australian mines Other Global mines Australian mines Other Global mines Source: Wood Mackenzie, 7 May 213 9

10 Projects threatened by high capital costs Thermal coal - Capital spend to build a tonne of new capacity US$ per tonne ROW Australia Source: Port Jackson Partners, Opportunity at risk,

11 Australia s coal export growth (volumes, Mt) Mt Metallurgical coal Thermal coal Source: Bureau of Resources and Energy Economics, Australian Government, p - projection 11

12 Long-term outlook thermal coal Seaborne import demand for thermal coal (213-23) Seaborne export supply of thermal coal (213-23) Seaborne demand (Mtpa) 2,5 2, 1,5 1, 5 Growth in demand will be driven by China, India and SE Asia Seaborne export production & import demand (Mt) 2,5 2, 1,5 1, 5 with sources of supply to satisfy that demand not yet identified. 1.2 Bt of unidentified supply JKT China India Europe SE Asia Other Australia Indonesia Colombia Russia South Africa USA Other Forecast demand Source: Wood Mackenzie, 7 May

13 Long-term outlook metallurgical coal Seaborne import demand for metallurgical coal (213-23) Seaborne export supply of metallurgical coal (213-23) Seaborne demand (Mtpa) Slowing demand growth will mean current overcapacity will persist until after Seaborne export production & export demand (Mt) Australia should remain the dominant supplier to the seaborne market JKT China India Europe Other Australia Russia USA Canada Mozambique Other Forecast demand Source: Wood Mackenzie, 7 May

14 CO 2 Emissions vs. Net Plant Efficiency 14

15 The imperative for CCS deployment Coal and energy supply no credible climate change solution without CCS. It s the only technology able to significantly reduce emissions from fossil fuels. Carbon capture and storage is not a substitute but a necessary addition to other low-carbon energy technologies and energy efficiency improvements. Mr. Juho Lipponen, head of CCS Technology Unit, IEA, 1/1/213 15

16 Australian action through COAL21 fund COAL21 is financed by a voluntary levy on Australian black coal producers. A world first. Objective is to advance R,D&D of low emissions coal technologies, especially CCS. 1 projects underway or completed, with COAL21 funding of AUD$26 million. ACALET manages COAL21 fund on behalf of the Australian black coal industry. 16

17 Examples of COAL21 fund projects Demonstration projects CO 2 capture Callide Oxyfuel Project o Total cost AUD$216m, COAL21 share AUD$77m Post combustion capture Delta project o Total cost AUD$28m, COAL21 share AUD$9m Storage projects Queensland Carbon Geostorage Initiative o Total cost AUD$46m, COAL21 share AUD$2m NSW Storage Assessment o Total cost AUD$54m, COAL21 share AUD$18m R&D projects ANLEC R&D - AUD$15m, COAL21 share AUD$75m Support for Otway Basin - CO 2 injection 17