2000 Australian Coal Conference

Staff Reporter

The theme of the biennial Australian Coal Conference, held on the Gold Coast, 7-9 May, was sustainability. Will coal continue to have a legitimate role in the 21st century? How should coal producers respond to the numerous pressures being brought to bear on coal, from the Kyoto protocols to poor returns on their investment? A line-up of local and international speakers offered coal industry executives a range of perspectives on what they might expect in the new century.

In opening the conference, deputy leader of the National Party and Minister for Trade, Mark Vaile, spoke of the growing competition from Chinese producers, the subject of much discussion throughout the conference. But Vaile also pointed out the opportunities available to Australian exporters, given the country's growth and the long distances between its domestic coal resources and main areas of demand.

Andrew Tucker, of the Australian Competition and Consumer Commission said projected demand for electricity in the APEC region would grow by 65% between 1995 and 2010 - an annual growth rate of 3.4%. Investment capital of some US$1.6 trillion will be required to establish the region's needed power infrastructure by 2010, he said. Coal was forecast to remain the dominant energy source for electricity generation.

Barlow Jonker director Jeremy Barlow predicted an increase in seaborne trade by 5% from 1999 to 2000. By 2005 seaborne thermal trade would increase to 437 Mt with supply coming mainly from Australia (123 Mt), South Africa (74 Mt), Indonesia (73 Mt) and China (59 Mt). Seaborne metallurgical coal will increase to 200 Mt, with Australia the leading producer at 112 Mt.

"The [Australian] industry has the potential, based on defined projects and resources, to increase thermal coal supply capacity from 92 Mtpa in 1998 to 130 Mtpa in 2005. Identified projects exist for further expansion after 2005 to reach a total export capacity in excess of 160 Mtpa," Barlow said.

In looking to the future, Barlow warned of the new commercial world which is evolving quickly. Deregulation has created a volatile market in which profit was becoming as much a function of market risk management as of physical asset management. Another important development is the growing use of screen trading, in line with the international push towards transparency in transactions and the use of indices. In the USA Reverse Auctions would handle 5 Mt in 2000, he said.

In his paper, president of BHP Coal Queensland, Rick Gazzard, dismissed bids to distort free-market forces as doomed to fail. The comment was in response to calls to establish industry cartels such as a national coal marketing authority to overcome coal prices being set by a handful of major producers. In February BHP Coal took a price reduction of 5% for its metallurgical coal into the Japanese steel market, a move quickly followed by MIM and Shell.

Discussions around technology focused on the environmental challenge facing coal. One of the answers that emerged was the importance of the new and emerging coal-based technologies that will reduce emissions and increase efficiency of coal-based generation to over 55%.

"The defining challenge of the coming century will be to balance the 'trilemma' of interlocking sustainability issues - the economic aspirations of rapidly expanding populations in the developing world, environmental quality, and natural resource availability," said Tony Armour of American group EPRI.

Ron Knapp, chief executive of the World Coal Institute, warned that Australia's coal industry would be adversely affected by Kyoto. The impact can be reduced but coal must be kept competitive and Life Cycle Analysis research had to be supported.

Knapp also warned of complacency and hiding behind the USA to save coal from Kyoto. He called on Australian producers to help customers, especially Japan, the world's largest coal importer. Japan has limited domestic options to reduce emissions and would be dependent on off-shore solutions such as Emissions Trading. The World Coal Institute supports "in principle", international emissions trading and rejects carbon and other taxes which fail to cover all emissions, he said.

An important initiative to emerge was the agreement among coal executives to support the establishment of an ambassador role, with Australian Coal Association support, to promote coal as a fuel of choice. Michael Pinnock, chief executive, Queensland Mining Council and joint executive director, Australian Coal Association, said this was not to be viewed as a public relations exercise but a serious attempt to address some of the prevailing ignorance about coal.

QCT chief executive, Chris Rawlings underlined this point by saying consumers, who typically purchase electricity, never see the product in the way it is sold. While debate continued about declaring CO2 a pollutant, he said many had missed the point that it is a necessary gas on the planet. Rawlings added that the kind of co-operation evident in the US between utilities and producers should be practised in Australia for the long-term benefit of both.

The Australian Coal Association Research Program (ACARP) awards for outstanding projects were presented at the conference dinner on 9 May. See accompanying story for winners (see ACARP Awards).