Australia’s resource and energy exports are expected to bring in a record $349 billion (US$253 billion) in 2021-22, according to a new report by the Department of Industry, Science, Energy, and Resources.
While iron ore export profits will fall amid crashing iron ore prices, surging demand for thermal and metallurgical coal will drive Australian resource and energy exports to new record levels.
“Volatile weather conditions across the northern hemisphere have pushed up demand for Australian coal, and new supply chains created following Chinese import restrictions have now solidified and begun to gain the benefits of experience and scale,” the report said.
“Consumers across the Asian region may also be attempting to build stockpiles given the increasing likelihood that supply tightness will persist for at least another year.”
Aerial view of a modern large coal power plant in Dezhou City, Shandong Province, China in this undated photo. (chungking/Adobe Stock)
The global energy crunch has pushed coal and gas prices up to the advantage of Australian exporters.
Newcastle coal prices, the benchmark for Asia, has surged to US$203 (AU$280) per tonne, breaking the previous record. Global coal prices also jumped over 13 percent in a single day on Sept. 27, when it broke US$200 (AU$279) a tonne, and has since kept climbing.
“These record prices confirm that, far from declining, global demand for Australian premium thermal coal is rising, and forecasts indicate it will remain high for several years at least,” Resources Minister Keith Pitt told The Australian.
“With metallurgical coal prices also at a record level and LNG (liquified natural gas) fetching high prices, the outlook for Australian exporters is extremely good.”
The Chinese Communist Party’s ban on Australian coal as part of its trade war with Australia has led to rolling blackouts across the Asian nation, disrupting its factories and supply chains.
The UK and Europe are also facing large energy shortfalls. At the same time, Russia, Europe’s biggest exporter of natural gas, has not increased its gas supply, forcing Europe to compete with Asia for gas.
“Russia could do more to increase gas availability to Europe and ensure storage is filled to adequate levels in preparation for the coming winter heating season,” the International Energy Agency said in a statement.
Energy Minister Angus Taylor said the global energy crisis is a “wake-up call” for countries heavily pushing for renewable energy without a reliable energy grid to back it up.
Minister for Energy Angus Taylor looks on for the opening remarks of the Leaders Summit on Climate hosted by United States President Joe Biden in Sydney, Australia, on April 22, 2021. (AAP Image/Mick Tsikas)
“There are some who want to shut down these industries overnight. Look around the world about what happens when you cut supply lines,” Taylor told The Australian Financial Review. “It is simply not economically or politically sustainable to do so.”
“If you lose balance, you pay for it—you can’t have more renewables without dispatchable generation. That’s a hugely important lesson.”
In fact, the Australian Energy Market Operator has already warned that the country faces an electricity shortfall this decade unless a new generation is brought in to offset the exit of ageing coal plants.
Taylor said Australia had learnt its lesson when there were grid reliability issues following the closure of coal plants in South Australia and Victoria.
“We received our wake-up call, and we’re determined not to have a third one with Liddell,” he said, referring to the upcoming closure of another coal-fired plant in 2023.
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