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Key Findings

Some of the largest proposed coal proposals still continue to along the development proposal path – albeit with financial close being pushed out.

In Queensland, most prominent of these are: Adani’s 40Mtpa Carmichael mine, plus associated rail and port proposals; GVK’s 30Mtpa Alpha, 24Mtpa Alpha West and 30Mtpa Kevin’s Corner thermal coal mines, plus rail and port proposals; Waratah Coal’s 80Mtpa Galilee Coal and Alpha North, plus its 120Mtpa rail and 50Mtpa Abbot Point T2 coal export terminal proposals; Springsure Creek $700m, 6Mtpa thermal coal mine in the Bowen Basin; and Cockatoo’s Baralaba 3.5Mtpa PCI coal mine.

In NSW, BHP’s greenfield 10Mtpa Caroona underground thermal coal mine continues through planning, with construction due to commence in 2018.

Executive Summary

  • Thermal coal prices are down 22% year-on-year to a four year low of US$73/t in May 2014.
  • At US$0.94, the AUD is providing a less than expected cushion for Australian producers to falling US$ commodity prices.
  • Some major Australian greenfield mine, rail and port capacity proposals have been shelved in the last year. Most prominent of these are: Glencore’s 22Mtpa Wandoan thermal coal mine and associated rail proposal in the Surat Basin (Sept’2013); Dudgeon Point coal export terminal, 180Mtpa (Jun’2013); Lend Lease Abbot Point port AP-X (Feb’2014); Anglo-American Abbot Point port AP-X (Mar’2014); WICET stage 2, 32Mtpa (deferred).
  • Take-or-pay (ToP) contracts remain a key impediment to both the Australian and American coal industry’s need for export supply curtailment. Some new mine developments continue to progress due to the long term contingent liabilities of these ToP rail and port contracts.

Press release: Briefing note: Thermal coal outlook

Please view full report PDF for references and sources.

Tim Buckley

Tim Buckley, Director, Climate Energy Finance (CEF) has 30 years of financial market experience covering the Australian, Asian and global equity markets from both a buy and sell side perspective. Tim was formerly Director Energy Finance Studies, Australia/South Asia, IEEFA, and was a Managing Director, Head of Equity Research at Citigroup for 17 years until 2008.

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