GABBLING about the Asian dining boom has left many fed up from talk of a looming gravy train, but hungry eyes are yet turning to agriculture to help fill the void in Australia’s commodities exports as the mining boom fades.
The extent of coal’s slump has caught industry and government by surprise and the doom-and-gloom forecasts from some analysts differs deeply, with the rosier picture painted by the resources sector.
“Technology will inevitably change the electricity market,” said former Citi analyst and Institute for Energy Economics and Financial Analysis director Tim Buckley.
“There is a global transition happening and we need to be ahead of, not behind, the curve.”
However, citing forecasts from coal industry forecaster the International Energy Agency (IEA), the NSW Minerals council said coal use was declining in some markets, but global use was on the rise and with it, opportunities for coal exports.
“Between now and 2040 the IEA forecasts global energy demand to increase by almost 40 per cent,” a council spokesman said.
“Coal’s share of global energy will fall from 29pc to around 25pc in 2040. But the amount of coal used will increase, because while coal will have a smaller share, it will be a smaller share of a much bigger future energy market.”
Thermal coal is still NSW’s biggest export, but key indicators for its future bode ill. In 2014, the Bureau of Resources and Energy Economics forecast the falling thermal coal export price, then at $72 a tonne, would rise in the next five years to $90. Seaborne thermal coal now sells for $52/t at Newcastle Port, and even the industry-funded International Energy Agency predicts demand for seaborne coal will be flat for the next five years.
China is Australia’s biggest coal market by a country mile, but its coal imports fell 30pc in 2015. The population isn’t growing, its building boom has slowed and its energy demands have decreased accordingly.
Mr Buckley forecast demand for seaborne thermal coal to decline a modest 1pc per annum – 20pc across 20 years – but predicts dire consequences for Australian exports.
China will revert to self-sufficiency in coal and while Indian imports, contrary to market forecasts, are “now set to permanently and rapidly decline”.
India’s Energy Minister Piyush Goyal tweeted last week, after a Finnish company had won a reverse auction to build a solar plant.
“Through transparent auctions with a ready provision of land, transmissions and the like, solar tariffs have come down below thermal power costs.”
India is touted by as a saviour for the coal industry, but recent monthly coal import figures sent a stark warning, while the emergence of renewable continues to gain pace.
However, NSW Minerals Council is more bullish.
“In the last financial year, demand for NSW coal in India rose by around 110pc. In its Mid-term Market Report, the IEA estimates that India’s coal imports will rise by 6.2pc per year and that India will replace China as the largest importer of coal during the coming year,” the council spokesman said.
“In the same report, the IEA forecasts Australia to be the strongest beneficiary of this increased demand, with a growing share of the seaborne coal market."
NSW Farmers president Derek Schoen has a message for government: “Farming is a big part of our future”.
Mr Schoen has a checklist of priorities for government to grow the state’s agriculture sector.
He cites investment in new techniques and technology as priorities for the Rural Research and Development Corporations and CSIRO, as well as better infrastructure to reduce costs.
Horticulture is a particular growth target, he said, following recent free trade agreements for prospective markets in Asia.
The value of vegetable exports have grown 30pc since 2006, while nut production is forecast to expand from 139,000t in 2014 to 170,000t in 2020.
