From Gina’s mining note:
The historic climate deal between the US and China may impact Australian coal exports less than feared, but will put pressure on Australia to toughen its emissions reduction targets domestically.
The Minerals Council of Australia welcomed the deal, arguing it would increase demand for high-quality Australian coal and potentially uranium.
Former Reserve Bank of Australia board member Warwick McKibbin said according to modelling, in a scenario where significant global action was made on climate change, Australia’s fossil fuel industries would not necessarily be worse off. “We produce very good quality coal at low cost. We’d be the last coal industry in the world to close down,” Professor McKibbin said. Bank of America Merrill Lynch economist Saul Eslake also said the deal could be a positive for Australian LNG exports, with a number of very large projects currently in the works.
Hmmm, Australian coking coal is good and cheap, yes. But Australian thermal coal, the main target of low carbon power transformation, is the opposite. It is expensive and dirty and the damage will be material. That’s why Glencore is busy writing down billions upon billions today as prices tumble.
As for LNG, in the very long term it will be a good earner, after all of the projects have written down their asset values and sunk costs enormously a la Glencore. But make no mistake, in the meantime, it will not earn what is hoped. The LNG glut is here now, four years early, and is growing daily.
As for the G20:
“This is a major milestone in the US-China relationship and it shows what’s possible when we work together on an urgent challenge,” US President Mr Obama told a joint press conference with Chinese President Xi Jinping in Beijing.
But the deal is threatening to over-shadow the economic agenda of this weekend’s G20 summit in Brisbane, after Australian Prime Minister Tony Abbott fought hard to keep climate change in the background.
“If they don’t discuss climate change, it will be the elephant in the room,” said a US State Department source who asked not to be named.
There’s no escaping it. Australia’s carbon stance is an international and inter-generational disgrace.
