GlencoreXstrata has decided to put on hold for the short to medium-term its mammoth A$6 billion Wandoan project because low coal market prices made it uneconomic.
At current price levels, GlencoreXstrata estimates that close to 30% of world seaborne thermal coal production is cashflow negative.
GlencoreXstrata said it expects its production of thermal coal to increase to 140 million mt by 2015, from 121 million mt in 2012.
So coal pruduction will still increase, but not so fast.
At RenewEconomy Giles Parkinson cites a report by Citi, the world’s largest investment bank, as saying that
peak coal in China is not just probable, it could be imminent. Under one of its scenarios, coal consumption could peak in 2014. It is certainly likely to happen by 2020.
Citi says there are four key drivers impacting coal consumption in China:
(1) reduction of air pollution; (2) structural downward shifts in China’s GDP growth and energy intensity; (3) robust growth of China’s renewables and nuclear capacity, along with increased availability of natural gas from pipeline/LNG imports and domestic production; and (4) efficiency improvements in coal power plants.
Citi also warns that coal miners should not count on other markets such as India picking up demand either because of economic issues and a lack of structural reform.
Deutsche Bank said earlier this year that Chinese coal demand could peak in 2017 and Parkinson says China may in fact legislate to limit coal consumption of 4 billion tonnes.
However Guy Pearse is sceptical of talk of ‘peak coal’ pointing out that production continues to expand. He says that global banks like like HSBC and Goldman Sachs, themselves heavily invested in coal, talk down coal’s prospects to discourage new entrants while the prices are low.
The Australian Coal Association (ACA) reckons that at current prices half of the existing thermal coal mines in Australia are either uneconomic or in danger of becoming uneconomic.
The Australian coal industry has significant political and economic clout. It’s estimated the sector produces $48bn in export income and 46,000 jobs.
Greenpeace says that 91 proposed coal projects around Australia would triple Australia’s production of export coal over coming decades from around 300 to 900 million tonnes per annum.
The Bureau of Resources and Energy Economics (BREE) says only 16 of the 91 new coal projects are committed to go ahead. Around 57 projects are at the feasibility stage and another 19 are simply ‘publicly announced’.
Campbell Newman wants to go full steam ahead on Galilee Basin. He wants Tony Abbott to ‘really just get out of the way’. He nominates opening up the Galilee Basin as his top economic priority where nine new mega coal mines are proposed to open over the next decade.
Michael Roche, Chief Executive of the Queensland Resources Council, quotes the BREE as saying that world trade in thermal coal will grow by about 2.6% pa, two thirds of which will be demand from India and China. He reckons India’s demand for thermal coal is going to grow at about 9% a year.
I hate to tell you, but if the US Department of Energy are right, the startling “new” fuels of 2040 will be oil, coal, and natural gas.
And here’s the bad news: as a result of the continued reliance on fossil fuels, global carbon emissions from energy are projected to increase by a stunning 46% between 2010 and 2040, jumping from 31.2 billion to 45.5 billion metric tons. No more ominous sign could be found of the kind of runaway global warming likely to be experienced in the decades to come than this grim figure.
In the IEO projections, all fossil fuels and all of the major consuming regions contribute to this nightmarish future, but coal is the greatest culprit. Of the extra 14.3 billion metric tons of CO2 to be added to global emissions over the next 30 years, 6.8 billion, or 48%, will be generated by the combustion of coal.
They finger China and India:
China alone is expected to contribute half of the added CO2 in these decades; India, 11%.
The author of the article, Michael T. Klare, sees the future in terms of a struggle with powerful fossil fuel interests. The political realm will only respond when climate change becomes obvious.
As the severity and destructiveness of climate change becomes increasingly evident in our lives, ever more people will be pressing governments around the world to undertake radical changes in global energy behavior and rein in the power of the giant energy companies.
That’s a formula for cooking the planet.
I’ll finish with some China images I found in Der Spiegel some time ago: