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Wednesday, May 30, 2018

Coal industry wild optimism failed

The Australian Government's "Coal" information in 2018 produced in 2011

The information below was on an Australian Government web site on 30 May 2018: "Department of Industry, Innovation and Science - Resources"

It shows "forecasts" of coal exports for the years 2011/12 to 2016/17. It was evidently created in 2011 and has never been updated.

The wildly optimistic "forecast" of thermal coal exports for 2016/17 - 267.9 million tonnes - is 25 per cent above the actual amount that was exported in 2016/17 - just 201.7 million tonnes.

Forecasts of thermal coal production were even more fantastic. In 2016/17 Australian coal mines were to produce 332.9 million tonnes when the actual figure was only 250.0 million tonnes.

If the excess of thermal coal produced over exports is assumed to be domestic consumption, then the "forecast" domestic consumption for 2016/17 is shown as 65.0 million tonnes. The actual figure was only 48.3 million tonnes.

The Federal Government talks up the prospects of new thermal coal mines in Australia, seemingly encouraged by out-dated and unrealistic forecasts created in the distant past.

Running blind

Cutting numbers of staff in the Department of Energy has left the Australian Government in a position of not knowing which way is up. Its Ministers promote investment in declining industries as a result of being under the spell of wildly optimistic, wrong forecasts.

Leaving wrong forecasts available on Government web sites is not without consequences. It invites costly investment decisions to be made by mistake across the entire economy -


Coal is a fossil fuel accounting for around 40 per cent of total world power generation.1 Coal is primarily a mixture of carbon and hydrogen atoms, with very small amounts of sulphur (bound with carbon or iron) and other elements.
Australia provides around 30 per cent of the world coal trade.
In 2011, Australia was the world's largest exporter of metallurgical coal and the second largest exporter of thermal coal. Australia is also the fourth largest producer, and has the fifth largest resources of black coal in the world.
Australia's accessible economic demonstrated resources are sufficient to sustain current black coal production rates for nearly 100 years.2 Brown coal accessible economic resources are estimated to be able to sustain current brown coal production for over 500 years.2
Coal is Australia's largest energy export earner. In 2010–11, Australia exported 283 million tonnes (Mt) of metallurgical and thermal coal to world markets worth A$43.7 billion. Total coal (black, saleable) production in Australia in 2010–11 is estimated to have been 345 Mt. Over the medium term, total Australian metallurgical and thermal coal exports are forecast to increase by nearly 72 per cent: from 283 Mt in 2010–11 to 486 Mt, valued at $56.5 billion, in 2016–17.
The majority of Australia's metallurgical and thermal coal exports were exported to the Asian region in 2011. This leading position has grown over many years of coal trade, based on the quality of Australian coal resources and the ability of Australian industry to meet and respond to the needs of its customers.
In 2011, Australia's top four export markets for metallurgical coal were Japan (40.8 Mt), India (28.9 Mt), Republic of Korea (16.5 Mt) and China (13.7 Mt). Australia's top four export markets for thermal coal were Japan (65.4 Mt), the Republic of Korea (29.5 Mt), China (19.9) and Taiwan (19.1 Mt).
Australian brown coal (lignite) production, mainly from the Latrobe Valley in Victoria, was 68.75 Mt in 2009–10. Brown coal is used domestically in electricity production. Coal, both black and brown, accounted for over 75 per cent of Australian electricity generation in 2009–10.

Australian coal production and exports


financial years
2008–092009–102010–112011–12 (f)2012–13 (f)2013–14 (f)2014–15 (f)2015–16 (f)2016–17 (f)
Thermal coal209.7198.3206.1224.8238.2271.6290.2319.0332.9
Metallurgical coal130.0163.0146.0152.0169.0180.0195.0213.0222.0


financial years
2008–092009–102010–112011–12 (f)2012–13 (f)2013–14 (f)2014–15 (f)2015–16 (f)2016–17 (f)
Thermal coal136.4135.0143.3162.6173.1206.6225.2254.0267.9
Metallurgical coal125.0157.0140.0148.0166.0176.0191.0209.0218.0

Export Value (A$m, nominal)

financial years
2008–092009–102010–112011–12 (f)2012–13 (f)2013–14 (f)2014–15 (f)2015–16 (f)2016–17 (f)
Thermal coal17 88511 88613 95617 84617 64119 94320 39021 63521 604
Metallurgical coal36 81324 52629 79331 09430 12233 32134 75734 75434 932
Total54 69836 41243 74948 94047 76353 26455 14756 38956 536
Source: ABARE Australian Commodities March Quarter 2010 and BREE Resources and Energy Quarterly March quarter 2012. (f) forecast.
1IEA's Paper on Power Generation from Coal 2011—Ongoing Developments and Outlook
2Based on 2010 rate of production.