July 12, 2017 Read More →

Decisions to Curb Coal Use in South Korea, Japan and Taiwan Will Have Profound Effects on Australian Coal Export Market

Michael Slezak in the Guardian:

As Australia mulls the building of its biggest-ever export thermal coal mine, its biggest foreign buyers look set to reduce their consumption, driving down the price of Australian coal, and the profitability of its mines.

Japan, South Korea and Taiwan together buy about 30% of the world’s exported thermal coal, including 70% of Australia’s export coal.

Australia’s office of the chief economist has projected that market will grow by 8.7% by 2022 – triple the global rate of growth in the sector – but analysis by the pro-renewables Institute for Energy Economics and Financial Analysis (Ieefa) suggests the market will actually contract.

The Australian projections assume a growth in the global export coal market of 2.5% by 2022, but Ieefa analyst Tim Buckley says that is overly optimistic, given the world’s two largest buyers are clearly contracting.

China, the world’s biggest buyer of foreign coal, is forecast to continue to reduce imports after reaching its peak in 2013. And India aims to virtually cease thermal coal imports.

But Buckley says the main problem for Australia’s biggest overseas thermal coal markets is internal moves in Taiwan, South Korea and Japan, which make Australia’s projections, released in March, out of date.

In what was described in local press as an “unprecedented move”, the new Korean president elected in May, Moon Jae-in, immediately ordered the temporary closure of eight ageing coal power plants in South Korea for 30 days, and announced 10 plants would be shut down for a third of each year starting from 2018.

Moon also reportedly said he would consider suspending the construction of coal power plants that are less than 10% completed.

In Japan, decreased electricity consumption and growth in renewable energy was dampening post-Fukushima plans of a boom in coal-generated electricity, Buckley said, with two proposed plants already cancelled in the first three months of 2017. That was likely to be the tip of the iceberg in the next few years, he said.

In May, Taiwan updated its eight-year green energy development plan, which forecast a decline of one-third in its reliance on coal.

“The combined implications of Japan, South Korea and Taiwan as Australia’s three most import thermal coal export markets is profound,” Buckley said.

The result, Buckley said, is likely to be a reduction in demand for Australian coal from those countries of up to 2% each year.

Full article: Energy economics group says export market for Australian coal will decline



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