The parallel universes of thermal coal – by Matthew Stevens (Australian Financial Review – November 4, 2018)

The parallel universes of thermal coal have rarely been in more confounding focus. In one cosmos we have arguably the most financially literate of the anti-fossil-fuel lobby, the IEEFA, mounting an apparently data-filled argument that the home of Australian thermal coal, the Hunter Valley, is now on track to “terminal decline as markets transition away from coal”.

Then, in a galaxy far, far away, there is Glencore, which over two years has spent $US3.4 billion ($4.7 billion) adding thermal and coking coal projects to what was already Australia’s single biggest coal mining business.

On the very same day last week that the IEEFA called out a tipping point in the decline and fall of coal, Glencore offered up a similarly data-fuelled prediction that coal demand in Asia was actually set to double by 2040 and that demand for the quantities and qualities of the little black rock that only Australia can produce would rise disproportionately to the general growth curve.

The cornerstone of Glencore’s demand-side modelling is that there are 2000 gigawatts of installed thermal coal generation in Asia and 171GW of additional capacity under construction.

Glencore reports that there are 251 new plants under construction across south-east Asia. Those plants will generate 81GW of power and they will collectively burn through 260 million tonnes a year of coal to make that happen.

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