QMEB » The Australian coal industry – Creating value for Australia’s future
Latest News

The Australian coal industry – Creating value for Australia’s future

The coal industry plays a vital role in Australia’s economy, energy security and community, it is Australia’s largest export earner (valued at $55 billion in 2008-09) and employs around 140,000 Australians – 40,000 directly and 100,000 indirectly, mainly in regional Australia, With over 54% of our electricity generated from black coal it also underpins the security, reliability and comparative low-cost of Australia’s electricity supply.

The Australian coal industry is working with government to invest in solutions to reduce emissions from the utilisation of coal. Through the COAL21 Fund the industry is raising $1 billion over 10 years from a voluntary levy on coal production to support the demonstration of low emission technologies for coalfired power generation. These technologies can also be applied to other industrial processes such as steel and cement manufacturing.

Australia was the only one of the world’s 33 advanced economies to grow in 2009 during the worst global recession since the Great Depression. A principal reason for this was our continued coal exports. The importance of coal in the economy is also evident in its growing share of GDP. This share has more than doubled, from 1.7 % in 2006-07 to 3.5% in 2008-09, making it the largest contributor to the mining sector.

Every year, the coal industry pays billions of dollars to Commonwealth and State governments in the form of corporate taxes, natural resource royalties and payment of freight charges. In 2008-2009 coal royalties were worth $3.1 billion to the Queensland Government and $1.3 billion to the New South Wales Government. This flows back into the community in the form of state funding for hospitals, schools and roads.

The coal industry also contributes tens of millions of dollars annually to fund community social infrastructure. This is in addition to the benefits that flow from its day-to-day operations – including jobs and business opportunities, contributions to public infrastructure, and support for education, training and apprenticeships.

1. Coal and the global financial crisis
Coal is a principal driver of Australia’s growth and economic prosperity. It played a key role in preventing Australia going into recession in 2009-10.

In May 2009 the Reserve Bank forecasted that Australia would go into recession for six months but by February 2010 it had amended this view as the impact of the global financial crisis in Australia was very mild in comparison to the outcomes in many other countries, where deep recessions have been experienced.

In short, future cost exports of both thermal and metallurgical coal will continue to grow 5% per cent.

Thermal coal exports are likely to grow at a faster rate (67% per year) than metallurgical exports (3.5% per year). This is largely as a result of expected thermal exports from the Surat Basin towards the end of the forecast period.

2. The coal industry’s substantial contribution to the Australian economy
The coal industry pays billions of dollars annually:

  • to governments in the form of royalties, taxes and charges (eg for shire, transport, freight and port services); 
  • to workers in the form of wages and salaries; 
  • to businesses through purchases of goods and services; 
  • to shareholders and investors; 
  • to the community – e.g. through superannuation funds and contributions to community social infrastructure. 

Thus for every $1 of profit earned in Australian the coal industry puts in excess of $1 back into Australia. In 2008-09 the industry did this by committing $10.4 billion in net capital investment, paying $12.9 billion in taxes and royalties and returning some $7 billion in dividends to Australian shareholders.

3. Major Export Markets
Most of Australia’s thermal coal exports go to North Asia. Last year, over 80% of thermal exports were delivered to Japan, South Korea and Taiwan. Japan is Australia’s most important customer for thermal coal, accounting for 45% of our thermal exports or over 60 million tonnes of thermal coal.

Japan is also the major destination for Australian metallurgical coal exports. Japan accounts for 29% of these exports, having imported 40 million tonnes of Australian metallurgical coal in 2009. However, the split between exports is much more even for thermal coal, with China, India, South Korea and Europe all being major destinations.

4. Investment
Coal Mining and Infrastructure Projects

In the 12 months to October 2010, coal projects valued at $2.8 billion were completed together with coal infrastructure projects valued at around $1.9 billion. As at 31 October 2010, “advanced” coal mine and coal infrastructure projects, those committed or under construction, totalled $8.3 billion.

5. Electricity generation

Coal plays a vital role in our energy security by providing a secure, affordable and uninterrupted supply of energy. Black coal used in electricity generation is also a major source of Australia’s greenhouse gas emissions contributing about 21% of total emissions (with brown coal or lignite contributing a further 11%). This is why the black coal industry is working with government in investing in carbon capture and storage technologies. These technologies can reduce emissions from the utilisation of coal while assisting us to meet our energy security objectives. They can also be employed to reduce emissions from industrial processes such as steel, cement and alumina production and from electricity generation from other fuels (e.g. gas, lignite and diesel).

By Kath Elliot of the Australian Coal Association www.australiancoal.com.au

Add Comment

Click here to post a comment

Gold/Silver Index