Macfarlane confident on coal future

DESPITE the fact that so much Australian coal production is now underwater with producers losing money on every tonne they produce, Commonwealth Resources Minister Ian Macfarlane isn't expecting to see much in the way of mine closures in the short term, commenting that he expects Adani Mining's Galilee Basin coal development to proceed.
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Ian Macfarlane.

Haydn Black

Coal producers are under pressure, with not many exporters making profits.

“What is happening is the coal industry is sweating its assets, just as the iron ore industry is,” Macfarlane said at the 2015 APPEA oil and gas conference in Melbourne yesterday.

“They also have some pretty complicated long-term take-or-pay arrangements with both haulage operators and ports, so in many cases it is cheaper to produce coal at a loss than to pay out on those contracts.

“From what we have seen, coal demand is still strong, and so I am heartened that when you look at the market long-term, particularly our low-sulphur coal, especially compared to one of our major competitors, Indonesia, means we are well-placed to supply high quality coal to world markets.”

That includes the controversial Adani coal project in the Galilee Basin, as India is looking for a 30-year stable supply of coal and Australia is well placed to supply cheaper coal than anywhere else in the world over those years.

This means Australian coal exports are likely to be maintained, or even grow, if the Adani project proceeds.

However, Macfarlane would not be drawn on whether the Abbott government's proposed $5 billion loan scheme for northern Australia, announced in last week's budget, would be used to help prop up the Galilee project.

“That's all part of the process and I am not going to speculate on what projects could or couldn't benefit, but it is designed to build infrastructure, so we will see what happens,” Macfarlane said.

He shrugged off concerns that a UNESCO review on the impact of the resources sector on the Great Barrier Reef could see the reef placed on the endangered list.

“Any time any agency anywhere in the world does a study based on science I think you will find the resource industry comes out of it absolutely glowing,” he said.

“The impact on the reef, particularly in terms of things like the Crown of Thorns starfish, is not coming from the resources industry.

“I would expect UNESCO, as a respectable organisation, to base its assessments on science, and on that basis I would be confident.”