Limiting fossil fuels caused a sharp decline in market value, official data found.
The Anthony Albanese government’s $125 a tonne price cap significantly impacted on coal prices. The commodity’s value halved during January and February 2023, just two months after the measure took effect.
“Treasury has extended the period over which prices return to their long-term anchors to better reflect ongoing price pressures associated with current market disruptions but this adjustment period remains highly conservative relative to market views to account for the downside risk of sharp price corrections, such as the 50 per cent fall in thermal coal prices over the first two months of 2023,” latest budget papers said.
The Department of the Treasury does not expect the value of metallurgical coal, thermal coal, iron ore or liquefied natural gas to increase anytime soon.
“[Long-term prices] are expected to settle over the forecast period [and] have been increased modestly to take account of recent developments in commodity markets, inflation in the mining industry and updated assessments of long-run supply and demand fundamentals. The commodity price assumptions remain conservative and at the lower range of market forecasts,” budget papers said.
The remarks came after the federal government, and different states and territories, limited the impact of global commodity prices on energy costs. This was promised to curb “extreme increases” in international wholesale energy prices due to the Russia-Ukraine border conflict.
Federal Treasurer Jim Chalmers made no apologies for taking “urgent and targeted” regulatory action. He claimed price caps would “dampen” national retail electricity price hikes by up to 13 per cent during the 2023‑24 financial year.
“Without these policy interventions the average family would be paying $230 more on their electricity bill,” he said in a public statement.
Meanwhile, the Queensland Resources Council (QRC) blamed the State Government’s “excessive revenue raising” for the Sunshine State dropping seven places as a mining investment destination.
“In the Fraser Institute Annual Survey of Mining Companies 2022 on the question of Queensland policy perception, the state fell to 28th place just ahead of Brazil and Victoria and 16 places behind Tasmania,” QRC chief executive Ian Macfarlane said in a public statement.
“The results are not good for long-term investment in the Queensland resources sector, not just coal.”