Coal's reign as an energy source is far from over. Australia's bureau of Resources and Energy Economics has forecast that the country's thermal coal exports, used to generate energy, will rise from 170.9m tonnes in 2012 to 189m tonnes in 2013, 223m tonnes in 2015 and 315m tonnes by 2018. "That's a lot of coal," said the analysts at Italian brokerage Banchero Costa in a recent report on Australian coal.
Most of the extra demand will, perhaps unsurprisingly, come from powerhouses China and India, said the report. New projects demonstrate just how comitted Australia is to the growth of its coal industry to meet international demand for a cheap source of energy.
Some 16 new projects are at the commitment stage, which will add 1 some 59m tonnes per year of capacity by 2016, according to the Australian government. On top of that, there are 57 projects at the feasibility stage which, if all come into fruition, would add some 380m tonnes per year of capacity, says Banchero Costa. There is, however, a problem for Australian coal producers.
All the projects are leading to one thing: an oversupply of coal. The report says with Australian producers often stuck in long-term deals with rail and port operators, they cannot halt shipments, even though their margins are squeezed by lower coal prices. For shipping, however, the more coal in the market to carry, the better.