Within a time frame of only five years, mining for
black coal has grown from a $10 billion industry to a $30 billion
industry, becoming Australia’s largest export and the country’s
fastest growing industry. The rise in demand can be accounted to
the tremendous growth surge occurring in Asia at the moment, with
China, Japan, South Korea and Taiwan, in particular, collectively
demanding more than 80% of Australia’s black coal exports.
Mining has always been a source of revenue for Australia. As recent
statistics from 2005 show, the mining sector accounted for 4.1% of
the nation’s GDP and brought to the country around $78 billion
in revenue, 70% of which was generated through exports.
Analysts claim
that Australia has been in its “Second Wave” of
mining since the 1960’s. The first wave, lasting throughout
much of the 19th and 20th centuries, was triggered by the industrial
revolution, which required heavy amounts of coal to power industry.
The so-called Second Wave - dominated primarily by oil, gas and
coal - has driven Australia’s mining sector since the 1960s,
and is expected to continue well into the future, particularly
as huge
energy consumers like China and United States turn to the rest
of the world to supply their energy needs.
Australia, being an energy producing nation, benefits from the
demand for energy minerals, and in the midst of this
current climate experts
are confident that black coal will continue to be Australia’s
largest export. Producers, they claim, can expect to
maintain revenues at the current levels for at least
the next couple
of years. As the
world's largest coal exporter (in 2005-2006, Australia
supplied 30% of the world total), Australia supplies
markets in more
than 35 countries
around the world. While China, South Korea and Taiwan
are beginning to increase their demand for coal, it is
Japan
that imports
the largest amount of Australian coal (45%), with Europe
(12%) and
South America
(5%) being other significant coal consumers.
Yet forecasters
warn that the current growth rate of this Australian industry cannot
be maintained throughout the
rest of the decade. Columbia, Venezuela, China and Indonesia, other
major producers of black coal, will increase the global competition,
causing prices to eventually peak at a certain level and then eventually
plateau. Although the next few years will certainly still be strong
ones for the mining sector, Jason Baker, the Australian General
Manager
for business research and industry consultant group, IBISWorld,
advises those in the industry to “enjoy this year as it will
likely be the last year of doubt-digit growth for the foreseeable
future.”
Each year, IBISWorld forecasts
the top 10 fastest growing industries in Australia. Although
coal is not in the top 10 list this year, analysts predicted
that eight out of the top ten growth industries in Australia
will
be in
the mining sector, including copper, gold, nickel, silver-lead
and iron ore mining.
A
Challenging Future
Besides competition, other specific challenges to the black coal
industry are inefficiencies in transport
and logistics infrastructures. At the beginning of 2006, IBISWorld
had predicted that this industry would grow by 81.3%, but scaled
it back to 59.3% after realizing the transport and logistics
constraints in dealing with the demand for coal and its delivery.
Yet these are the short-term challenges. In the long-term, the
biggest problem that black coal producers have to face is
global warming and the affect of coal as a heavy pollutant in the
environment.
It is a heated debate for Australians, especially after the release
this past month of a major new report into climate change by the
IPCC (Intergovernmental Panel on Climate Change).
Green party leader Bob Brown says that a plan to shut down the
coal industry should be drawn up in 3 years time, and miners retrained
for jobs in renewable energy industries. The idea, however, has
been condemned by Prime Minister John Howard and Australian Labor
leader Kevin Rudd, who dismisses the Greens’ call for an
end to Australian coal exports as an “absurd proposition.”
“Coal is part of Australia’s long term future,” said
Rudd.
Next week we will look at the debate more closely, presenting
both sides of the argument both for and against coal production
in Australia.
Source for images: Australian Coal Association
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