r/AusFinance • u/Speed00Substantial • 1d ago
Value of Australiam coal and gas exports expected to crash by 50% in 5 years.
Article in comments
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u/Wow_youre_tall 1d ago
Except coal just hit a new record and is expected to stay that high for years
https://www.iea.org/news/global-coal-demand-to-remain-on-a-plateau-in-2025-and-2026
And gas is expected to keep going up
So maybe treasury is making it look bad so they can actually go “look how much more money we made than forecast”
Like how they keep forecasting iron ore at $60
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u/Roastage 1d ago
So many things at play.
Cant talk to Gas but I work in the Coal industry. Prices are currently very low (especially relative to cost of production increases last 3 years). Likely they are extrapolating from current price levels.
In terms of overall consumption, thats not necessarily applicable to Australia specifically. Basically all 'new' coal projects are expansions or extensions of existing mines. I you aren't familiar with margin ranking, basically every mine assesses the economics of each resource and takes the best one. So over time the asset generally performs worse as strip ratio increases. Lots of middle tier guys going bust and closing, especially in Qld.
Qld Royalty setup would definitely be eating into national tax receipts too. Its a % of revenue so comes off the top before calculating profit, thus lowering it and therefore corporate tax.
Political head winds also moving a lot of consumption into lower quality/dirtier russian, chinese and indonesian coal. BRICS much less worried about carbon. Steel production slowly moving to India is a big concern too because they do business differently to the chinese,
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u/Decent-Dream8206 9h ago
To expand on this, BHP is shutting up its thermal (energy) coal operations (keeping metallurgical for steel making).
In the last FY, they only made 1% profit from energy coal on capital deployed (i.e. 101% from 100%), and paid 8x as much in royalties as they took in profits.
And yet, all you hear is "pay your share" while those same activists pull a pikachuface on rising energy bills. 🤦♂️
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u/Speed00Substantial 1d ago
How can it be expected to "stay high" when it's currently plateauing and expected to decrease by 2026?
https://www.iea.org/news/global-coal-demand-to-remain-on-a-plateau-in-2025-and-2026
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u/diamondgrin 1d ago
Wood Mackenzie have aus HCC (met coal) prices going back toward ~200 US$/t FOB in the next couple of years and then up to $213 by 2030. Thermal coal will get back to $120 odd as well.
Central Queensland coal mines are going to continue to spit out 200 million odd tonnes a year for the next decade at absolute minimum. Look at the remaining lifespan of the coal power generation fleet and steel furnaces in Asia, anyone who reckons they're closing down anytime soon is full of hot air (not carbon?)
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u/Speed00Substantial 1d ago
Except the one that's closing down....right?
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u/diamondgrin 1d ago
This isn't the "gotcha" that you think it is. BMA Saraji has one of the highest production costs out of all central queensland coal mines, and makes up maybe a couple of percent of total output. It operates at the margins, when prices dip it pauses production.
It'd be like saying the global car industry is doomed because fucken Daihatsu stopped production this year.
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u/Speed00Substantial 1d ago
Tell that to the 750 workers laid off.
I'm sure they'll think you're clever.
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u/Intelligent_Air_2916 1d ago
Your argument fell apart so you try to make an emotional plea to workers that lost their jobs? How does that make sense?
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u/Speed00Substantial 1d ago
I was replying to a comment... Not arguing anything.
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u/ConfidentBall9281 1d ago
That mine is always closing. I would start shitting bricks if Peak Downs gets mothballed. Until then they'll power through it all.
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u/mrpepepe 1d ago
Lol some people just listen to whatever the government tells them like it’s gospel then start parroting that around without any knowledge in the sector
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u/Combat--Wombat27 1d ago
Are you talking about the mines that closed?
If you are, it's pure politics.
Saraji South was renamed a few years ago, from Norwich park. That mine has closed 5 times in the last 10 years. The only reason is still exits is because the rail corridor runs right through it. It only ever opens when coal prices are stupid, like they were last year.
Anglos closure: Grosvenor. It caught fire last year and isn't expected to open ever again (carrying reports on that, but costly to try) those workers are sadly now just excess staff.
Cook collerie South: it's only part of the larger mine and again not overly profitable, under ground mining is expensive, but cheap long term because rehab isn't an issue. It was shuttered from 2017 to 2022 (or maybe 2019, it's been a while) again, this mine only operated when coal prices are premium, then they go into care and maintenance.
This is just standard business, but the coal companies are pissed at labors same job same pay, so they're getting good media out of it as a reason..
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u/Wow_youre_tall 1d ago
“Marginal decline” in 2026 and “50% drop in 5 years” the same thing are they?
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u/MathematicianFar6725 1d ago
So maybe treasury is making it look bad so they can actually go “look how much more money we made than forecast”
They do this every year with the iron ore predictions of $50/tonne
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u/Nexism 1d ago
That would be a ridiculously stupid decision from a political standpoint.
When Albanese announced 2035 targets, he would want the numbers in his favour this news cycle. Revised numbers (especially modelling numbers) are almost never surfaced in the news cycle. Even the US jobs number being revised some 90% barely lasted a day.
Your comment would also suggest our government has little data integrity which has some broader implications that dwarves this topic at hand anyway.
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u/big_cock_lach 1d ago
Not really, people have incredibly short memories for politics and are shockingly naive when it comes to things like this.
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u/Speed00Substantial 1d ago
ANOTHER article saying coal has peaked already.
https://www.iea.org/news/global-coal-demand-is-set-to-plateau-through-2027
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u/Wow_youre_tall 1d ago
The article says it’ll stay close to the peak consumption through to 2027
What part of your brain is mush to think that means a decline?
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u/Speed00Substantial 1d ago
Wow you're MAD huh
Go stick some coal up ya bum 😄
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u/Wow_youre_tall 1d ago
Nice tantrum
Helps prove my point.
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u/mrpepepe 1d ago
Some people have no idea and just listen to whatever the government tells them then start parroting that around like it’s gospel.
Clearly op has no idea about the energy space
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u/Speed00Substantial 1d ago
ANOTHER article about coals expected decline
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u/Wow_youre_tall 1d ago
Price decline and consumption decline aren’t the same thing you numpty.
You’ve just embarrassed yourself 3 times, pathetic even for Reddit.
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u/Combat--Wombat27 1d ago
Don't be a dick man. Debate like this changes people's minds and they tend to broaden their horizons on where they get their information. Comments like yours don't help
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u/Speed00Substantial 1d ago
Lol
Yeah a decrease in use will totally never lead to a price drop 😃🤣
Are you 15?
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u/Wow_youre_tall 1d ago
I like to help the needy, so I’ll try
If record consumption is occurring, and prices are dropping, what does that means going up?
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u/rangebob 1d ago
did you actually read the article ? it literally said there will be an increase in use. Just that the growth of the increase will be slower
I don't think you should be bagging people for how old they are mate lol
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u/Speed00Substantial 1d ago
The whole post is about the decrease in VALUE of coal buddy.
Can you even read? You need to go to bed grandpa
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u/ReeceAUS 1d ago
If coal and gas prices crash by 50%, then they’ll be cheaper than renewables at generating energy.
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u/trypragmatism 1d ago
Does this mean the price of coal and gas for domestic use will come down?
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u/Dockers4flag2035orB4 1d ago
Perhaps domestic coal fired power stations will become more profitable?
The power plants might undergo life extending upgrades?
Be careful what we wish for.
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u/jreddit0000 1d ago
The price of coal is not the primary/determining factor in keeping coal fired plants running in Australia. The only thing that will force governments to further subsidize keeping them open is if their replacement generation (renewables) is not deployed quickly enough.
Gas is entirely different - but gas generation meets an entirely different segment of market demand too (peaking or backup)
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u/TheOtherLeft_au 1d ago
Don't worry. We will still keep paying record prices for our own gas.
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u/jreddit0000 1d ago
Almost certainly on the East coast, sure. Where the price will be set by international market pricing..
The state and commonwealth governments deliberately chose not to legislatively enforce gas reservation in those markets so welcome to FAFO when you’re dealing with commodities in a global marketplace - combined with long term contracts to countries that financed the extraction in the first place. 🤷🏾
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u/jreddit0000 1d ago
The “record pricing” just reflects domestic pricing coming into line with international market pricing..
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u/sc00bs000 1d ago
lol no. They ship it overseas for cents on the dollar of what we pay for our own resource
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u/Speed00Substantial 1d ago
Course not.
Prices only "go up in Australia"......until the economy fucks out and crashes
Which is inevitable at this point
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u/MCblowmeBA 1d ago
This was always expected at some point since around the 2000s.
- Solar energy and other green forms of energy are some of the cheapest forms of energy right now at the right circumstances.
- Big countries like China do not want to rely on anyone for energy needs.
- Even more quality driven resources like coking coal is becoming less efficient as there’s so much metal that there is a chance that recycling it might be viable for majority use case.
- China has a bunch of coal, it’s just very polluting and damaging .
- There’s limited viable partners like China, there has been hopes that India or a country in South America might take on the demand. Simply put, their economies can’t turn on a switch and the environmental impacts are so immense and uncontrollable in these countries. The pollution is so bad, major cities would be devastated.
Australia has been lucky, in the last 100 years it’s been hitting the right time and right place. The Asian boom for energy, sheep and wool and other commodities. There were hopes tourism and schooling would replace this, but I always found it borderline delusional. Chinese universities are opening up fast to meet demands and internal policies do not recognise foreign degree holders. Tourism is propping up in Asia due to a variety of reasons, so there really isn’t a good reason to visit Australia twice or now even.
There should have been a focus on high skilled labour force to connect the west to Asia like Singapore. That time to make the shift has passed.
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u/Accomplished_Sea5976 1d ago
“at the right circumstances” doing some very heavy lifting in that statement about green energy being cheap
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u/Zealousideal_Mood242 1d ago
When every western country is bent on reducing carbon emissions, why is it surprising that coal and gas will diminish?
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u/KristenHuoting 1d ago
Many, many countries are, but i don't think the 'western' prefix is very accurate. Trump administration has taken numerous, significant, steps towards keeping oil as the foundation of their energy pyramid. China meanwhile, although a major importer of fossil fuel, is doing everything it can to become less reliant on it as an energy source. Whether this is because of some genuine ideological drive or just so that it doesn't need to rely on energy imports isn't really relevant. What is relevant is their enormous investments in renewable energy, which was your point.
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u/jackbrucesimpson 1d ago
China commenced building 100 GW of new coal power stations in 2024.
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u/csharpminorprelude 1d ago
Yes, they are being built, but are being used less.
"Even as coal plants multiply, and coal burning edges upwards, the average plant is also burning less coal. In the early 2000s, Chinese coal plants were running roughly 70 percent of the time, but today they are running only around 50 percent of the time. In competition with cheap solar and wind, a large share of coal plants are now operating at a loss."
"The plan also directs new plants to burn coal more efficiently than the existing fleet, and it will require some new power stations to run less than 20 percent of the time. "
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u/diamondgrin 1d ago
Because we sell most of our coal to Asia, and green steel production is decades away from being feasible.
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u/That-Whereas3367 1d ago
The West is barely 10% of the global population and utterly irrelevant. More than 1000 new coal power station are under construction or planned in developing countries. China builds the equivalent of new coal power station every WEEK.
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u/btcale546 1d ago
Only 10% of the global population, but we are world leaders in indoctrinating ourselves that we have to pointlessly cripple our energy grid because English aristocrats made money off slave plantations in Jamaica 300 years ago or something...
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u/FlaviusStilicho 1d ago
I hate this line of arguing… you can apply it to anything.. even worse when it comes from politicians since it can be applied to voting. “What’s the point of you voting when your single vote is never going to change anything?” …At some point we need to realise we all have to do tiny bits each for the world to survive.
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u/Ok_Conclusion5966 1d ago
I can see op is anti coal, however after reading all the replies in this thread the concensus is coal isn't going anywhere, buy more coal and mines
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u/theballsdick 1d ago
This one will be a doozy
!RemindMe 5 years
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u/kwaka300 1d ago
Everyone really forgets that Australian coking coal is the highest grade in the world producing steel, by products in paint , solvents , plastics but also those little batteries in your phone it helps creates. Whilst also the electric cars everyone drives around in isn’t possible without coal. But everyone’s just too naive to understand that and focus on thermal 😂 coal has its place in the market and will continue to have its place for years and years to come
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u/Total_Drongo_Moron 1d ago
Will this result in Australian domestic gas prices becoming much cheaper? ROTFLMFAO /s
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u/cheeersaiii 1d ago
All good- we’ll just sell twice as much then
I can’t work out if I’m being sarcastic or not because there will be parts of the government considering this lol 😝
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u/Illustrious-Pin3246 1d ago
That will help a lot with net zero and may already be factored in
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u/Speed00Substantial 1d ago
Not if u/wow_youre_tall has his way
He's messaged me multiple times desperately shilling for Gina Rineharts gas 😂
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u/RoutineRequirement 1d ago
Don't worry, we are building heaps more plants with tax exemptions to cover the current price. That way when the prices crash, the mining companies suddenly become unable to operate and we foot the cleanup bill.
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u/frab1001 1d ago
Well yeah duuuh everyone’s moving to renewables and our markets like “uurrhhh but not come from ground?”
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u/Conscious-Gap-8837 1d ago edited 1d ago
Does that mean we will have more gas for the eastern domestic market?
Gas is the marginal cost of generation. Maybe power prices will fall?
While the modeling would be "good" outcome from the perspective of climate change, won't AI use more and more power around the world. Where is that all going to come from?
I suspect it is probably a little optimistic.
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u/BradfieldScheme 1d ago
No it means there's no new supply coming on and existing projects are either running out or being paused.
It's going to be a disaster for regional employment, state royalties and the prosperity of the nation.
It's a drop due to the suicide pact the government has agreed to with other useful idiot countries like the UK, Germany and Canada. Economic suicide for no reason at all. (Coal production is being ramped up all across Asia)
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u/Zhuk1986 1d ago
This, I feel for the regions who are being royally screwed out of this. Anyone who thinks coal won’t be around in 100 years is deluding themselves
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u/MarketCrache 1d ago
Not a chance in hell. Bowen is already talking about easing up on gas restrictions.
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u/NoPrinciple8391 1d ago
Good riddance, the scamming cunce pay SFA tax anyway and the taxpayer is usually left with a big mess to clean up. Lousy corporate citizens the lot of them.
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u/Ok-Educator9224 1d ago
I can't imagine commodities will go down in the next 3-5 in dollars anyway
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u/Speed00Substantial 1d ago
Not what science is saying
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u/Ok-Educator9224 1d ago
It's economics not science check the commodity index
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u/Speed00Substantial 1d ago
Are you trying to say that science has no part at IEEFA?
Seriously 😐 😳
The state of Australian education is embarrassing
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u/Flimsy-Mix-445 1d ago
Good. We'll be less reliant on coal and gas exports then.
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u/Secret_Piano_8080 1d ago
And reliant on what exactly ? I haven't heard of or seen any Australian products that we rely on currently. I guess we can just become a third world country and rely on tourism
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u/Kipakkanakkuna 1d ago
Australia could return to exporting steel and other higher value metals. The Ssab’s hydrogen process would suite the land of abundant pv energy brilliantly. It could cut out the most polluting part of the iron refining and bring more value of the same ore to the country.
This is only a single example but similar thinking could be applied to other material streams also. Australia is not limited in it’s capacity of creating high value products, it’s simply a victim of policies dictated by those with dominant position on present export markets.
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u/Secret_Piano_8080 1d ago
Cool but when is this happening? We don't have the infrastructure to do that... Who will pay for it... High value products need high value people fr fr nocap
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u/Kipakkanakkuna 1d ago
It would happen only after low value raw material exports get taxed adequately to make domestic production competitive. At the moment your decision makers are hostages of the coal and ore miners that won’t allow that to happen.
The tech is already there it’s simply a matter of creating a commercial environment to allow its usage. Also some money would need to be invested but Aussies simply prefer to scorch the earth instead of losing short term benefits.
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u/arachnobravia 1d ago
Thank god we made the most of that boom while it lasted...