This article is from WeChat official account:Liaowang Think Tank (ID: zhczyj), author: Wang Wen acetate (Outlook Intelligence observer), from the head of FIG: visual China
In the past two days, the news that “China has suspended Australian coal imports” has aroused heated discussions overseas.
A screenshot of the report. The picture above shows Bloomberg: “China bans Australian coal imports because of political tensions between the two countries”, and the picture below shows the Australian Herald Morning Post: “Chinese companies were verbally told to stop importing Australian coal”
In fact, so far, there has not been an official ban.
Judging from the responses of Australian government officials, they did not want to “ferment” things. The Australian Prime Minister stated that “this arrangement by China was not uncommon in the past,” while the Australian Trade Minister stated that Australia is in contact with China and is trying to obtain “some assurance” from China.
However, the market gave a direct response: According to reports, on October 13, local time, the shares of Australia’s largest coal company Whitehaven fell by more than 6%, and the shares of energy company New Hope also fell by 5%. In addition, the Australian Energy Industry Index fell by 1.3%.
Australian netizens also became nervous. Twitter netizen Kary said, “Coal’doom is inevitable’. South Korea and Japan are determined to develop renewable and recyclable energy. There are definitely fewer coal buyers. Our economy should better start to diversify. “
The picture is a screenshot of twitter
Netizen curious-s went further: “Worse than this is that the government is also expanding the coal industry, and few people in Australia agree.”
The picture is a screenshot of Reddit
But there are also rational netizens: “The report said that it was only a Chinese buyer’s words, and the official did not confirm the existence of the coal ban. However, it mentioned that Australian products are facing stricter entry inspections. Also released data, saying that imports from Australia fell 5.1% in the first three quarters.”
The picture is a screenshot of twitter
Environmentalist Marcel Mamie commented: “It is a good thing for Australia. Let us’return’ coal to the ground where it should be treated.”
The picture is a screenshot of twitter
Netizen BaldingsWorld took out the national “climate pledge”: “We give up coal because we want to put the environment above interests and corporate greed. Sorry Scott, is it okay to treat the problem too personally? Our 2060 climate Commitment is more important.”
The picture is a screenshot of Reddit
Australians, why talk about coal discoloration?
1. The country sitting on the minecart
The Australian continent has an ancient geological age, a wide range of mineral-rich zones, and abundant energy resources such as coal and natural gas.
October 13, 2020, a train carrying coal in New South Wales, Australia. Figure|Visual China
According to the latest data, Australia’s proven coal reserves are 147.435 billion tons, accounting for 14% of the world’s proven coal reserves and ranking third among countries with proven coal reserves in the world. Australian coal has the characteristics of low ash, low sulfur and high heat, and has high mining value.
Coal has a wide range of uses. According to its use, thermal coal and coking coal are the two main types. Thermal coal is mainly used to provide combustion power for thermal power plants and industrial and mining enterprises, while coking coal is mainly used to produce coke. Coke is mostly used in steelmaking, and is currently the main raw material for steel and other industries, and is referred to as the “basic food” of the steel industry.
In the coal family, coking coal is not much. The world’s coking coal resources account for 10% of the world’s total coal resources. Russia, with the largest reserves, accounts for almost half of the world’s coking coal resources. China is the largest producer and consumer of coking coalAustralia is the country that exports the most coking coal.
In addition to coal resources, Australia has abundant iron ore reserves. It and Brazil are the world’s largest iron ore suppliers. Basically, the iron ore output of the two countries is provided by the four major mines. After expanding production since 2010, in 2015, the global market share of the four major mines reached 50%, forming a typical “oligopoly” pattern.
For a long time, the Australian economy has relied on resource exports. Although in recent years it has also been seeking economic transformation, resource exports are still its important industry. Australia’s coal resources are mainly distributed in the eastern coastal basin, with high output and low domestic demand, coupled with its advantageous geographical location and developed shipping, which is very conducive to exports. Australia’s coal exports account for about 1/3 of the world’s total exports. The industry is lucrative and provides a lot of employment.
Since coal and iron ore resources are so abundant, why doesn’t Australia develop its own steel industry, but keep exporting it?
In simple terms, direct output is more profitable than local development.
From an international perspective, Australia is a resource-exporting economy with a capital-intensive feature. This not only absorbed capital, but also concentrated labor in the service industry, resulting in excessive labor costs, which squeezed the development of labor-intensive industries such as manufacturing to a certain extent.
Analysis from domestic development:
First of all, Australia’s domestic resources are unevenly distributed. The coal mines and iron mines are located on the east bank and the other on the west bank. They are too far apart. Australia is vast and sparsely populated, lacking railroads, and ground transportation is not smooth;
Secondly, the heavy industry chain is not perfect, which is not conducive to product development and upgrading. The finer the steel processing, the greater the degree of customization, and the closer it is to buyer-driven. However, the Australian smelting technology is general, the scale is also small, and the added value of crude steel is limited;
In addition, there are other energy consumption issues. Take water resources. Although Australia is surrounded by the ocean, its water resources, especially freshwater resources, are not abundant. The lack of these supporting resources will also limit the development of the steel industry.
Therefore, rather than expending great efforts to develop the steel industry, it is better to export coal and iron ore directly, which is more labor-saving and relatively profitable.
2. How important is coal exports to Australia?
In recent years, the global coal industry has undergone in-depth adjustments, and world coal production has shown a trend of volatility. Since 2013, due to the large amount of coal being replaced by clean energy, its output has declined significantly. However, due to the continuous changes in world energy demand, global coal production has resumed steady growth after 2016.
Australia Bowen Point Abbot Coal Port, Abbot Point Coal Export Terminal is located 25 kilometers north of Bowen, Queensland, Australia’s northernmost port . Figure|Visual China
Currently, there are 6 major coal mining companies in Australia, namely Anglo American, Yankuang, Glencore, BHP Billiton, Rio Tinto and Broad Energy. Among them, Rio Tinto Group sold all coal-related businesses and assets at the end of 2018. In terms of business, it mainly involves coking coal and thermal coal. From the perspective of the output of the six largest coal companies in Australia in the past three years, the output of coking coal and thermal coal has not significantly decreased.
It can be said that the contribution of the coal industry to the Australian economy is obvious to all, and the government certainly supports it. At the end of 2019, the Australian wildfire broke out. Some experts believe that climate change is the indirect cause of the Australian wildfire, and coal is a serious polluting industry. The government denied this statement, and Australian Prime Minister Scott Morrison also made a strong statement and refused to shrink the coal industry.
Coal prices have rebounded, demand has recovered, coupled with government encouragement, Australia has not only attracted important US coal producers to come to the market, but also led to a strong rebound of local small and medium-sized mining companies. In 2018, coal surpassed iron ore in one fell swoop and became Australia’s most profitable and valuable export commodity. From 2017 to 2018, Australia achieved a record export revenue of 61 billion Australian dollars through the sale of thermal coal and metallurgical coal.
Under prosperity, there are always crises.
In April 2018, the Australian Ministry of Industry, Innovation and Technology issued a warning in its quarterly report: “2020 will mark the end of the significant growth phase of Australia’s resources and energy sector.” The report analyzes that in the next few years, the prices of Australia’s main resource and energy export commodities will decline, “especially iron ore and coking coal, which will be affected by the continuous growth of international market supply and the decline in China’s steel production.”
3. China, the world’s largest coal importer
Note: The unit EJ is “Eijiao”, J is “Joule”, and 1EJ=1×10^18 J. Picture source: China Coal Economic Research Association
It can be seen that coal consumption is still growing in emerging countries, especially China, India, Indonesia, Vietnam and other countries.
In 2019, China’s coal consumption accounted for 51.7% of the world’s total consumption, making it the world’s largest coal consumer.
India, which ranks high in coal consumption, has experienced rapid economic development in recent years, which inevitably needs a huge amount of energy as support, and is also importing a large amount of coal. However, India’s coal consumption last year was less than a quarter of China’s, with a year-on-year increase of only 0.3%, a record low since 2001.
Although the United States is also a big coal consumer, it has experienced the fastest decline in coal consumption in recent years. In 1979, the United States had the largest coal consumption in the world. In 1986, it was overtaken by my country and ranked second. In 2015, it was overtaken by India to be the third largest coal consumer. In recent years, coal consumption in the United States has declined year by year, with a year-on-year decline of 14.6% in 2019.
The shift in the focus of consumption also means changes in import and export trade. Since the 1970s, in addition to Japan and Germany, the main coal importing countries have added China, India, and South Korea.Home.
From 1971 to 2018, the world’s major coal importing countries and regions and their coal import volume changes. Data source: International Energy Agency (IEA)
From 1971 to 2010, Japan has been the largest coal importer. In 2010, China and Japan accounted for 17% of coal imports. Japan’s absolute amount of coal was slightly higher than that of my country; in 2011, China’s coal imports exceeded Japan. , Ranking first, accounting for 21% of the world’s total coal imports; in 2014, India’s coal imports surpassed Japan, ranking second. From 2009 to 2018, South Korea’s coal imports have remained at the fourth place, accounting for 10% to 11%.
Ocean-going ships unload and transport thermal coal at the Lianyungang Port Coal Terminal. Figure|IC photo
It can be said that coal is the main energy resource for accelerating the process of urbanization and improving people’s living standards. The demand for coal in existing and emerging Asian markets remains strong, while the Chinese market has absolute strength.
In the first three quarters of this year, the total value of China-Australia trade was 859.73 billion yuan; the main commodities China imported from Australia were iron ore, natural gas and coal, accounting for 76.4% of the import value. According to the South China Morning Post, Australia was the country that exported the most coking coal to China in the first half of this year.
However, with the optimization of the energy structure, China’s coal consumption is declining-China has announced a carbon neutral goal and will soon turn to clean energy. The “China Steel Industry Energy Conservation and Low-Carbon Development Report 2019” shows that the optimization of China’s energy consumption structure has accelerated.
At the same time, in recent years, my country’s quality requirements for imported coal have gradually increased, and the customs has strengthened the quality and safety testing of imported coal and environmental protection project testing. In 2019, the coal imported from Australia has been subject to strict inspections and the customs clearance time has been extended.
Four. Australian Coal, panic?
If China does not import, what about Australian coal?
In short, look for new “buyers.”
Many people think of India. However, according to a recent report by Reuters, ship tracking and port data compiled by data agency Refenitiv show that India’s coal imports have fallen sharply for several consecutive months. Reuters pointed out that this is mainly due to the economic stagnation caused by its national blockade. At the same time, according to Indian media reports, in order to alleviate the increase in local coal inventories, cope with the decline in coal demand and boost local coal sales, the Indian government has decided to cancel the import of hybrid coal in the 2020-2021 fiscal year to encourage coal companies to turn to the country. This may further reduce the amount of coal imported by India.
There is also Japan, which ranks relatively high in the world in terms of coal imports. But in recent years, Japan has been committed to the development of clean energy. For example, hydrogen fuel is the focus of Japan’s energy focus. The country is eager to replace its dependence on nuclear energy.
As for coal import demand in Asia and other regions, it is not enough to negotiate with China.
Sales are not good, can Australia try to transform?
In August 2018, Australia issued two reports-the National Hydrogen Research Organization (CSIRO) issued by the Commonwealth Scientific and Industrial Research Organization of Australia. Energy Development Roadmap: Towards a Sustainable Economic Development of Hydrogen Energy Industry” report, “Australia Future Hydrogen” report issued by the Hydrogen Strategy Group led by Alan Finkel. These two reports provide a blueprint for the development of Australia’s hydrogen energy industry.
(Note: The CSIRO report believes that from the perspective of hydrogen production costs, the cost of hydrogen production from coal is the lowest. The report also proposes to test coal gasification for hydrogen production in Victoria’s Latrobe Valley, which is rich in lignite. The development goal of the project is to realize the commercial production of hydrogen from coal after the 2030s.)
Perhaps Australia’s transition to hydrogen fuel can benefit from Japan’s energy intentions and become a leading Japanese fuel supplier.
In addition to the decline in the market, the strength of “Australian Coal”‘s competitors should not be underestimated.
For example, Indonesia has the fifth largest coal reserves in the world, and about 74% of its coal is exported. Indonesia’s coal is low in ash and low in sulfur, and is mainly used for power generation. It is thermal coal. Coupled with its geographical advantages, Indonesia has become the world’s largest thermal coal exporter, providing about 1/3 of seaborne coal.
Mongolia is a rising star in recent years. In recent years, with the government’s investment and construction of coal mines and railways and other infrastructure, Mongolia’s coking coal production capacity has grown rapidly.
And Russia. According to media reports, the latest document released by the Russian Ministry of Energy shows that Russia’s annual coal production will increase to 448-530 million tons in 2024, and its share in the global coal export market is also expected to expand from the current 11% to 25%. .
In short, the global market is changing rapidly, and it is difficult to judge where Australian coal will go in the future. But now Australia should be aware that once China loses, the local coal industry may suffer heavy losses. After all, “buyers” of the same magnitude are not so easy to find.
References:
[1] China’s position and strategy in the pricing structure of the international coal market|Zhang Zhongfang, Yang Qinglong, Wang Yijun, Liu Pei. Learning and Events 2015 Issue 7
[2]Analysis of coal supply and demand situation in major coal resource countries in the world and industry development prospects|Wang Weidong, Li Shaojie, Han Jiuxi. China Mining February 2015
[3] World Coal Supply and Demand Situation Analysis|Liu Chuang, Lan Xiaomei. China Coal. 2020, 46(4): 99-104
[4]India’s coal imports continue to drop sharply|China Coal Market Net.2020.06.18
[5] What is the reason for the stagnation of China’s coal imports? |Sinde Maritime. 2020.10.04
[6]Australian coal industry analysis and outlook|Futures Daily. 2019.12.17
[7] Australia’s economic transformation is struggling | Guo Qian. Economic Information News. 2019.12.24
[8] Why is exporting coal to China so important to Australia? |China Finance Network.2020.10.14
[9]”China suspends coal imports from Australia”, Australia’s domestic…|Global Network.2020.10.13
[10] The 2020 version of “BP World Energy Statistics Yearbook” is freshly released|Chinese Science News.2020.06.18
This article is from WeChat official account:Liaowang Think Tank (ID: zhczyj) author: B Wang Wen (lookout think tank observer)