Barnaby Joyce says the business case for big new coalmines “no longer stacks up” given the low price and slowing global demand for the fuel.
The agriculture minister’s comments were directed at the $1.2bn Shenhua Watermark coalmine planned for the fertile Liverpool Plains in his New South Wales electorate, but he conceded the financial argument applied in principle to all new coalmines.
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Asked whether Shenhua made sense commercially, Joyce replied: “No. Why would you build it. The price of coal is $60 a tonne. It just doesn’t make sense ... The inherent business plan these coalmines used to be stacked up by is no longer there.
“... If that thing [Shenhua] goes ahead it is going to cost them $200m just to say they want to do it, to buy the [state government] licence, $800m to build it, $300m probably to put aside for rehabilitation works – that’s a $1.3bn punt on $60 a tonne spot price. They could go down to the Hunter Valley and buy [a coalmine] for $350m to do exactly the same job.”
“I think if you were making a logical decision, you’d make the logical decision not to go forward with it,” Joyce said in an interview with Guardian Australia.
Asked whether the same financial logic applied to the $16bn Carmichael mine proposed by the Indian company Adani in Queensland, Joyce said “in theory yes ... you would have to look into Adani’s business plan. I haven’t delved deeply into Adani’s business plan, they have to deal with the issue of why they are investing here when you can do it somewhere else.
“But I do look at Shenhua’s books and they have a 42% reduction in profits, China Coal for the first time made a loss and the reason they gave was an over-availability of coal. Well if you have an over-availability of coal it doesn’t make a lot of sense to then go back and say we’re going to invest more than a billion of our own money in building a coalmine.”
China’s coal sector has been hit by chronic overcapacity and lower demand as the country battles pollution and its industrial growth slows. Shenhua’s market-listed arm, China Shenhua Energy, reported a 45% fall in profits for the first six months of this year. Its July monthly production statistics showed it had imported no coal in the first seven months of the year, and reports in China suggest it is actually preparing to export coal. China’s overall coal imports fell 31%. China Coal Energy, a separate state-owned coalmining company, warned in June that it expected losses of around 1bn yuan ($A220m) in the first half of the year.
But Joyce said he believed there were key differences between the Shenhua and Adani projects, including the fierce opposition from local farmers to Shenhua and the fact that it was located in a fertile farming region. He said he had not complained about other mines in his electorate, such as Whitehaven’s Maules Creek mine, although he says he was misled about the problems that would be caused by Whitehaven Werris Creek coalmine, which was creating dust and noise issues for locals and enormous problems with loss of water – the same problems he anticipated would be caused by Shenhua.
The prime minister Tony Abbott has said he understands “people being absolutely passionate to protect the Liverpool Plains” but insisted the Shenhua mine should go ahead because it would create hundreds of jobs.
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“Mining and agriculture have coexisted for 100-odd years in this country, they can and should continue to coexist in the future. As all the science tells us, it’s not going to have an impact on the water table. And frankly, if it’s not going to damage the farming areas, if it is going to bring billions of dollars worth of economic activity and hundreds of ongoing jobs, I think we should say ‘let’s go with it’,” he said in July.
Joyce said the $300m figure for Shenhua’s rehabilitation bond was “a rough approximation”. Companies are not always required to pay the money as a bond and can usually offer a financial assurety.
Joyce appeared to suggest the NSW government should demand it as an upfront bond.
Asked whether it should be held as a bond, he said “that’s a very good question for the state government. I think you should have to prove you have the capacity to rehabilitate the site and if you can prove it you should prove you have the money to do it.”
Joyce has strongly backed the government’s proposed changes to the Environment Protection and Biodiversity Conservation to stop so-called “lawfare” – environment groups using legal challenges to stall developments – but they appear unlikely to pass the senate.
When federal environment minister Greg Hunt conditionally approved the Shenhua mine Joyce said the “world has gone mad”, but accepts Hunt was acting as he had to under the law.
http://www.theguardian.com/environm...ase-for-big-new-coalmines-no-longer-stacks-up
Seems I may have misjudged Barnaby, he may have some commonsense after all
Barnaby Joyce says business case for big new coalmines 'no longer stacks up'
Ah yes the good old Fabian indoctrinated communist paper the Guardian and the good old leftie Lenore Taylor....Just to listen to her whining on the Insiders on Sunday morning prompts me throw up my weeties.....
Ah yes the good old Fabian indoctrinated communist paper the Guardian and the good old leftie Lenore Taylor....Just to listen to her whining on the Insiders on Sunday morning prompts me throw up my weeties....I never hear her criticizing Bill Shorten for putting obstacles in the way of the CHAFTA when you have the likes of all the Labor state premiers, Bob Hawke, Simon Crean, Bob Carr and Martin Ferguson all telling barnacle BILL to get out of the way let it all pass through to create more jobs and with so much benefits in the national interest of our economy.....Bill is bowing to the CFMEU ...he is their puppet and is politicizing the whole deal.
Did you actually read the article ?
Virtually all of it was quotes from Barnaby Joyce.
How do you interpret that as being biased ?
What is your forecast for a ton of coal in 2016, 2017, 2018
Currently around 43 USD
My prediction is prices will have to get down to sub 30 USD, possibly lower as demand growth continues to slow and eventually turns negative. China and India are both looking towards alternative fuel sources.
So as barnaby says, why would you build a new coal mine when you could buy an existing one for a fraction of the cost?
India, unlike the stupidity in Australia, cannot afford to subsidize solar and wind power, so coal is what they need and will use for a long time to come.
How long is a piece of string?.......Your prediction of US $30 is wishful thinking if you are a GREENIE....I am sure you would love to see the end of the coal industry.
India is starving for coal and in their minds is the cheapest fuel....some 100,000,000 people are still without power in India.
India, unlike the stupidity in Australia, cannot afford to subsidize solar and wind power, so coal is what they need and will use for a long time to come.
Currently there's a roughly 10% thermal coal supply surplus. China and India – accounts for 90% of imported coal in the world (China alone 50%).
Chinese thermal coal imports are collapsing. In July the country imported 9.7 million tonnes of thermal coal, a slight increase on June but down a massive 24.6% on levels of a year earlier. Revealing the broader trend, imports between January to July were down an even greater 39.1% on the same period of 2014.
So let's see what would happen if Noco reality prevailed. 2 massive new coal mines get build. They start to produce coal, into a market where coal demand is falling, where supply in tens of millions of tons in surplus. Would they have a cost structure below the marginal cost of equilibrium supply? Would they cause other mines to close?
Wouldn't we be better off investing in something with a long term future?
India has an airport that runs on solar power. They have a goal of 100 GW installed solar capacity by 2022. It's cheaper to install than centralised power generation. It's quicker to install too.
Wouldn't we be better off investing in something with a long term future?
Yes of course I read it and yes I commented on Barnaby Joyce.
Where did I say she was biased?
noco said:Lenore is a typical LUG supporter and most likely swaying towards the Greens.......She, like most of the socialists these days do not care about jobs or the economy of Australia.
One of your typical ad hominem rants...
Yeah...and many with a full brain on this forum would agree with me and many of the naive will agree with you ole' mate.
Interesting, because I haven't seen a great deal of support for your views on this forum.
When you can't even look at the facts about coal prices, over supply, the fact that India is going to reduce coal imports, and then make a logical judgement on the basis of those facts I really can't see many people with a "full brain" agreeing with you.
Hmmmm...lets say there are lot more smarter people around the world than you Sydboy....Leave it to the experts and stop siding with the watermelon people to destroy our coal industry and our economy......The national interest should be our priority...not the tree huggers...I have a very good solution for them.
BTW. where did you pluck those figures from?....out of thin air and of course solar power runs when the Sun sets and pigs might fly and solar power is great for base loading!!!!!!!!!! B*ll $h*t.
Coal prices will rise just like other commodities...Your statement is wishful thinking and only time will prove it one way or another.
5 mins of Google research would show you those figures are true.
If you dispute them then provided what you think are the true figures and let's make the debate one based on facts.
China and the USA are quite likely going to use carbon emissions as a trade weapon once they gain a competitive advantage. The solar sector alone employs twice the workers of the coal industry in the USA and that's with relatively little Govt support.
Have a read of the report in the SMH today where monitoring stations around Newcastle show air quality is not meeting the standards, especially of the 2.5 micron particles that can travel deep into lung tissue.
I find it a shame anyone can look at an open cut coal mine and think that's a better option than wind or solar power.
I would have thought that being a keen contributor of economic commentary that you'd care about the accuracy of what you post in that field.meh
if you have to be so obtuse why would I bother
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