Despite the growth in demand from other Asian markets over the past decade, Japan remains the major market for Australian thermal coal exports – accounting for around 40% of all exports in the 12 months to August 2015 – however longer term growth prospects appeared limited, NAB said.

“In June 2015, Japan’s Ministry of Economy, Trade and Industry released a new energy plan for 2030. Reflecting the competing priorities of security, cost and the environment, the plan spreads electricity generation across a range of sources – with LNG at 27% of the fuel mix, coal at 26%, renewables between 22-24% and nuclear between 20-22%,” according to the NAB report.

“According to the Industry Minister, this plan would require at least 35 operating nuclear reactors. Although Japan has 43 at present, a typical lifespan of 40 years would reduce this number to 23 by 2030 – indicating either a significant construction program or an extension to the lifespans of existing capacity (something the Nuclear Regulation Authority is currently considering).”

The Australian Department of Industry, Innovation and Science forecast a fall in the volume of Japanese thermal coal imports in the period to 2020.