Article by Lou Caruana courtesy of Australia’s Mining Monthly.
COAL has proven resilient in uncertain times and there is now widespread belief that it will continue to provide the nation’s baseload power and economic growth – barring a black swan event such as a financial crisis or a war with our major trading partner, China.
In a week in which Prime Minister Anthony Albanese announced the eye-watering $368 billion cost of eight nuclear submarines, it should be remembered that tax on coal and iron ore exporters are two of the main drivers of government revenue.
Hogsback thinks it is somewhat ironic that Australia’s success in exporting minerals for Chinese development over the past two decades will essentially underwrite a military program designed to take China on.
When you look at 2022 trade data coal is doing more of the heavy lifting – even with the ban by China on Australian coal.
Coal contributed $141 billion of $461 billion in export revenue in 2022, which is 123% higher than 2021. Iron ore was next with $123 billion.
This strong coal revenue growth also helped deliver Australia’s largest trade surplus of $136 billion in the 2021-22 financial year just when it needed it the most.
At the Longwall 2023 conference in the NSW Hunter Valley this week, several presenters addressed the strength of demand for high-quality Australian coal. It is uniquely positioned to supply both its metallurgical and thermal coal for decades to come.
Veterans of several booms and busts had never seen it so good.
While inflation and a lack of skills are challenging, the mood remains realistically optimistic about the black stuff’s medium-term future.
Hogsback can remember when the 2000s resources boom, which was based on expanding trade with China, was cut short by a global financial crisis precipitated by the failure of US investment bank Lehmann Bros.
This week there have been several bank closures in the US including the Silicon Valley Bank that have spooked financial markets.
While the Hunter Valley is a long way from Silicon Valley, these developments in the US cannot be ignored.
The coal mining industry does not operate in a vacuum and must keep maintaining steady and safe production of high-quality coal to global and regional markets despite any financial or geopolitical noise if it wishes to remain Australia’s king of exporters.
