MELBOURNE – As debate swirls around the future of coal, Australian miners are counting on the higher energy content of the coal they dig and proximity to growing Asian markets to give them an edge over rivals and defy a global push towards cleaner energy.
With around $35 billion in projects in the pipeline, the world’s No.2 exporter of thermal coal is relying on Asian markets using the cheapest source of power even as they try to contain soaring emissions and choking pollution.
That growth in coal demand comes despite climate change taking center stage internationally ahead of U.N. environmental talks that kick off in Paris this month, with governments coming under pressure to do more to cut carbon emissions.
“Eighty years from now when the world’s last coal-fired power plant shuts its doors, it’ll be burning Aussie coal,” said Morgan Stanley commodities analyst Joel Crane in Melbourne.
Increased dominance of regional exports would be a boon for miners operating in Australia such as BHP Billiton and Glencore Plc, along with Asian companies that have invested heavily in the country like China’s Yanzhou Coal Mining Co, India’s Adani Enterprises and Japan’s Mitsubishi Corp.
Australia’s export coal typically has an energy content of 6,100 kilocalories per kilogram, compared with 5,130 kcal/kg from top global thermal coal exporter Indonesia, making it the best quality coal located near Asia’s growing markets.
That is particularly appealing for Asian buyers looking to feed newer, less-polluting coal-fired power stations.
“That is why Yanzhou sees this as a strategic long term investment, because it is not beholden to what happens in China,” said Reinhold Schmidt, managing director of Yancoal Australia, which is controlled by Yanzhou Coal and operates nine mines in Australia.
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