Coking coal is fine


A point I’ve made many times on the blog  about the practiced whining of the coal sector is nicely illustrated by a little post at the SMH blog today:

Analysts from global consultancy Wood Mackenzie had some surprisingly upbeat news for Australia’s struggling coal sector, countering perceptions that quite a few mines are under water at current prices and at risk of closure.

…WoodMac’s head of coal supply research Ben Willacy said that Australian producers of metallurgical coal are holding up well at today’s “extremely low” prices, and said only a few operators were incentivised to close mines.

Benchmark quarterly prices are at $US120 a tonne, the lowest they’ve been for six years and there’s still plenty of supply available. After a down-trend for the last four years, about half of the world’s mines aren’t making money, judging by the global cost curve.

However Australian producers have been very successful in taking an axe to costs, and pushing up supply to lower unit costs of production, Willacy said. As a result, several mines owned by the majors such as BHP Billion Mitsubishi Alliance, Anglo American and Rio Tinto are actually making a “decent margin” at the contract.

Exactly right. That’s not to say that there’s no pain the sector. There is, as expansions get shelved. But most mines are still fine and employment in the sector has been rising quite strongly with volumes.

Basically, whenever you see a statement by the coal sector, treat it with skepticism.

Houses and Holes
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  1. As Abbott said in Houston, coal is here to stay.

    That said undoubtedly some mines have reached the end of productive capacity either by end of mine life or limit of productive extraction given current cosl price/operational cost nexus.

    In some cases this will necessitate either the expansion of existing mines or development of new mine. Both beneficial to the nation’s domestic and export requirements.

    • migtronixMEMBER

      As Abbott said in Melbourne “I just refuse to be like that”, bringing up a mendacious imbecile whose best effort in 9 months has been getting awarded World’s Most Hated Leader shows your contempt for rational and honest debate 3d…

      • Mig. The Australian Prime Minister lauded the future of coal (gas conventional/shale and petroleum) in a very well received speech in Houston two days ago. The speech was upbeat and punchy and the audience lapped it up.

        How wonderful if we should find ourselves key players in global energy markets exporting energy and the accompanying prospects for growth and wellbeing to the world.

      • migtronixMEMBER

        3d what does any of that have to do with the Prime dumb-dumb? Maybe you want to give Gillard some credit? No? Hypocrite!

      • Gillard! Mining tax, carbon tax, in bed with the Greens. I don’t think so. The sector succeeded in spite of Gillard, only Ferguson had any clue as to its importance.

        (Weekend AFRs front page headline ‘Abbott goes all the way with Obama’ – Gillard wished she did 😉 )

      • migtronixMEMBER

        What a pathetic load of crap!

        BHPBilliton Market Cap – 178 Bil

        RIO Market Cap – 107 Bil

        Chevron Market Cap – 250 Bil

        Yeah Gillard’s little tithe was going to blow them up, but their super awesome management saw them through.

        Pathetic. Global demand is what sees them through 3d not their snot-in-through management practices…


      • dumb_non_economist

        “(Weekend AFRs front page headline ‘Abbott goes all the way with Obama’ – Gillard wished she did 😉 )”

        2d, is that like the “hydraulic extension” you get when you see/hear/talk about JB?

        “……..and the audience lapped it up”. Wow, really, mining/energy types loved it? Surprise, Surprise! (said Gomer Pyle style).

        The Mad Monk got the official reception he did outside of Houston because of good ‘ole American hospitality, nothing more, nothing less. You won’t see the rudeness there that you would here.

        Btw, if you were in the states you wouldn’t even know that Abbott was there via the media. All the reporting is closely acted and cropped for domestic consumption here.

      • Fresh from being rude about the Dismal Science – this does at least fit with the fundamentals. Long- medium term, coal is stuffed but coke is OK.

        3d; coal is not coke. This is about coke.

        3d; The Chinese and Seps are moving away from thermal coal. Because a) the Chinese can’t see or breathe and b) because in the rational world – the Prime F-Wit does not have superior knowledge of science than NASA.

        I’m right into making cash out coal while it’s here – but to some how appear to be setting coal as a central element of a multi-generational national strategy is flawed. In scientific terms – it’s barking mad.

        Hey 3d – I know you like to sound all rational like an say you’re somewhat agnostic on AGW (which isn’t actually the rational position) – but actions speak louder than words. It appears that you are a full tin foil conspiracy hat wearing card carrying AGW skeptic.

        Why else would else would you laud Abbots Texan speech? In what way does Abbots strategy realize that there is NOT a SINGLE peak body on the planet that rejects the IPCC position? How is Abbot’s strategy even sane?

        What is the difference in rejecting the 100% peak body consensus on AGW and the 100% consensus peak body positions on Vaccinations and smoking?

        If you are rational – given there is not one single international peak body that rejects AGW – then surely, the position taken of proponents of action on AGW is at least sound. Or are we all fools for believing NASA and ALLL the others. Russians and Saudis included.

      • Soory 3d – I wouldn’t be so shrill if the skeptic position wasn’t just so completely ludicrous.

      • Further, the World Bank recently issued a new report that carried a fascinating shift in language referring to the ‘deep uncertainties’ around various AGW claims, now recommending a combination of mitigation and adaptation.

        Adaptation is a significant change of narrative. Mitigation may soon be obsolete.

      • 3d,

        In his book “How to get expelled from school” Plimer says quite clealry that the Siple Ice core data does not fit with the Manuna Loa Atmospheric data.

        He says;

        “Antarctic ice core data (siple) shows that there were 330 ppm of CO2 in 1900” ….

        3d – the Siple data absolutely does not say that. Never has.

        Siple data quite clearly shows 295.8 ppm in 1899 and 294.8 ppm in 1904 (there is no 1900 number).

        Plimer put this in a book and sold it to children.

        That you would prefer Plimer’s so obviously flawed, non-peer reviewed pinion to that of NASA – says you’re not after facts – but searching for whatever fits your faith.

        And yes the climate changes. Plimer spends a chapter on the warming events within the current interglacial – without noting that Modern Warming – is by far, the most significant of those recent events.

        And yes – the next ice age will wipe most human traces from the planet – but I don’t give a stuff what is going to happen in 2,000 years – I’m interested in the next 50 – and geologists have not a clue on such short time frames.

        Please 3d – why is there not one single peak body rejecting AGW? Why has not a single one of them been wooed by the the apparently so very insightful Plimer position? Why not the Russians or the Saudis?

        Even if you have a bad gut feeing on AGW – how is completely rejecting a 10 year, 100% peak body consensus sensible? Responsible or even just managing risk? How is your position not just a little bit silly?

      • migtronixMEMBER

        You’re at it again 3d, what does AGW have to do with anything in this thread?!

        Sometime during your scholarship and subsequent post-grad sojourn to the States I wish they’d bothered to teach you some maths so you might actually realise how foolish your arguments are.

        Any cursory look at indicators reveals the Liberals are disastrous for the resources sector!! Equity valuations have been in free fall, underlying demand for raw commodities is drying up, AUD strength is eroding the *cough* foreign *cough* owners returns.

        Abbott has been a predictable disaster and who in his cabinet has ever been remotely close to a mine site professionally? At least with Labor some union leader would actually have worked on one!

        Your rhetoric is as appalling as it is ineffectual

      • Mig. HR introduced AGW. Coal is the bad boy of the AGW campaign.

        Read the threads before commenting!

      • migtronixMEMBER

        Ha ! You’re replying/trolling on my comment thread which is landing in my in box! What kind of idiot do you take me for? The Prime Minister?

        HRH introduced in passing viz Tony Dumb Dumb, you ran with it to obfuscate the original attack.

        3d 0 – 3 mig

      • I’m rational 3d – I’ve read Plimer cover to cover.

        Richard Tol, eh? One man debunks the consensus?

        The peak bods are still are signed up, 3d – regardless of Richard Tol – who is by the way an Economist 3d. An economist.

        Check the CURRENT formal positions of NASA, JAXA, The Royal Society – freaking ALLLLL of them 3d. All are CURRENTLY card carrying members of the formal IPCC position.

        Hey – if NASA come out tomorrow and said – AGW is bollocks and then all the others capitulated – I’d be down with that. I’d be stoked.

        3d – it’s not like the worlds peak bodies are split on this – they’re not.

        So what rational peer reviewed peak body supported evidence do you have 3d?

      • Hey 3d,

        You just gonna keep quoting Plimer – despite prima facie evidence of his clear ineptitude, (the kinder interpretation) and wilful deception of school children?

      • General Disarray

        Plimer lost all credibility after his previous work was completely debunked. He’s just an author for the scientifically illiterate and ideologically sympathetic.

        More preaching to the choir.

      • drsmithyMEMBER

        Along with Plimer, I believe the climate changes – he does a marvellous job of explaining the history of the climate changes from the beginning to time, many of which were truly enormous in scale.

        And irrelevant.

        Get the book. Can the AGW rhetoric.

        Hope he does better than the last fable…

        Further, the World Bank recently issued a new report that carried a fascinating shift in language referring to the ‘deep uncertainties’ around various AGW claims, now recommending a combination of mitigation and adaptation.

        You mean This one ?

        Even for you, minebot, that’s a pretty grotesque and partisan misrepresentation of what that report’s actually saying.

        Mitigation may soon be obsolete.

        I think the word you’re after is “futile”. Mission accomplished, eh ?

    • 3d,

      The uncertainties are indeed large and the IPCC explains them appallingly.

      But here it is;
      – there is a 5-10% chance that AGW won’t lead to any further warming.
      – a 10-20% chance of 0.5-1.5c warming – which will be bad
      – a 40% chance of 2-3c warming – which will be worse than bad
      – 20% chance of 3-4C – which will be disastrous
      – a 10% chance of >4c which will be cataclysmic.

      In simple terms 3d – there is a 90% chance that there will be a significant problem. This at least, is reasonably certain.

      Hey 3d – note how I respond to your specific points but in true Plimer, Mokton form – you don’t respond to specific points – but instead raise other spurious stuff.

      On the world bank – yep the deep uncertainties are as I set out above. The WB position notes that there is a fair probability that mitigation won’t prevent dangerous warming as Anthropocentric CO2 may already be too high – in which case we’ll need to adapt – but mitigate to prevent it getting worse. Be sure 3d – the world bank accepts the IPCC position.

  2. notsofastMEMBER

    It would be interesting to find out how past electrification of rail infrastructure has affected the economic viability of different coal mines. I understand it was quite common in Queensland. Has it had a significant impact or was it just another mal-investment?

    • NSF, A short while ago, it looked like diesel would be scarce or not available about now.
      Electrification was the preference, or really the only bankable option, (it is much more expensive to install the overhead system, but what could we do, go back to coal fired steam?)
      But soon we will have tons of LNG available x Gladstone and I presume future rail links will be hauled by LNG gas converted diesel locos. that will appease the Greenies to some extent.
      But unless there is a miracle resurgence in demand, coal is finished. (in Australia) Nuclear- hydrogen is the power, fuel of the future. WW

  3. FYI, I have it from senior horses mouths (I work in the Hunter Valley coal industry) that there are a number of mines in the Valley that are simply fulfilling contracts before majors changes (they were hinting at possible closures).

    These people had no reasons to try and pull the wool over my eyes.

    • As you would know there have been cases of mine expansion essential to ongoing business being denied (high profile one in your region). This is a very real threat and one that comes on top of subdued prices, environmental activism by a minority and heavy handed union demands.