Australia: The black coal sector – a look back and a look forward


  • Current and prospective producers of, and investors in, black coal exports from Australia;
  • Those seeking to understand likely medium term trends in coal supply and demand; and
  • Those seeking to shape policy and regulation for coal production in Australia.


  • The International Energy Agency recently summed up the outlook for the Australian black coal export sector very well: "It benefits from a large high quality resource base (in particular low cost/high quality coking coal) and from a formidable mining industry which has successfully cut costs in recent years. Australia ... continues to be well-positioned to serve coal import needs in the Pacific Basin." Australia is well-positioned to grow its exports of both thermal coal and coking coal over the next two decades.


  • While the export market outlook for Australian black coal is positive, coal project producers and investors in Australia need to work doubly hard at securing community support, especially for thermal coal projects, through rigorous environmental and social impact assessments and through respectful and transparent relationships with local landholders, townspeople and indigenous stakeholders.

2018 was a fascinating year of change and progress for Australia's black coal sector.

We have seen the arrival of some new and/or growing players who have demonstrated their confidence in the future of Australia's black coal export sector.  2018 saw strong prices, record export volumes and a forecast more than $20 billion contribution to the Queensland and New South Wales budgets from coal royalties over the next four years.  To cap it off, the latest World Energy Outlook published by the International Energy Agency points to growth in exports of Australian thermal and coking coal out to 2040, while describing the Australian coal mining sector as "formidable".

What the World Energy Outlook had to say

In a previous article (see  Global energy outlook – renewables switch but upside for Australian coal and gas) we reported that the International Energy Agency's 2018 World Energy Outlook (WEO) projected (under its core New Policies scenario) that Australia would boost its coal exports by 22 percent between 2017 and 2040. Reflecting expected coal power plant retirements in Australia, total coal production in Australia is expected to grow by a more modest 14 percent.

On an energy-adjusted basis, half of Australia's coal exports are expected to be coking coal, principally from Queensland's Bowen Basin.

Indeed, Australia emerges as the world's largest coal exporter. The WEO describes the outlook for the Australian black coal industry this way:

"It benefits from a large high quality resource base (in particular low cost/high quality coking coal) and from a formidable mining industry which has successfully cut costs in recent years. Australia ... continues to be well-positioned to serve coal import needs in the Pacific Basin."

This promising outlook for Australian coal is nevertheless expected to play out in a global context where overall coal demand is flat and coal's share of power generation keeps falling, from 38 percent to 26 percent and is expected to be overtaken by renewables (41 percent).

This outlook is a far cry from the IPCC's scenario of the near-elimination of coal power generation by 2050 as part of keeping warming to below 1.5 degrees (see  That Climate Change Report: What did it say, what does it mean?).  With so many new coal plants having been built in the past decade and still under construction, power generation is expected to be using nearly 3.4 billion tonnes of coal in 2040, which is 50 percent more coal than in 2000.

There is nevertheless a definite retreat from coal power, led by North America and Europe.

China is also expected to look to switch over time from coal power generation to gas and renewable energy in the quest for cleaner air. Indeed, coal use in China may have already peaked according to the WEO. That said, the expected Chinese coal demand of some 2.4 billion tonnes in 2040 is still 2.5 times higher than China's coal use in 2000.

The WEO also projects declining thermal coal use by Japan and Korea but concedes that the extent of the decline depends on a bigger share of power generation being claimed by nuclear power. Japan's latest energy plan provides for nuclear energy to supply 20-22 percent of Japan's power needs by 2030. However, in the seven years since the Fukushima disaster, only nine reactors have restarted in Japan. There are 39 operable reactors in Japan.

India's coal consumption is expected to grow by 120 percent out to 2040. Despite ambitious targets for increased domestic coal production, India is still expected to become the world's largest importer of coal, reflecting the "variable quality" of Indian coal, infrastructure constraints and a growing dependence on imports of coking coal.

While there seems to be an unchallenged positive outlook for Australian coking coal, there are uncertainties around the thermal coal outlook. For example, the WEO assumes that Indonesian coal exports retreat by over 40 percent by 2040 as more of their thermal coal is diverted to domestic power generation. The WEO cautions that "Indonesian exporters have shown they can mobilise production and exports rapidly when the market and price environments are favourable."

The WEO also reminds us that China was a net exporter of coal as recently as in the early 2000s. It therefore cautions that as domestic coal demand falls in China, we should not assume that the coal mining sector in China restructures at the same pace, pointing to the social stability complications in reducing mining employment. In that scenario, China could well again become a net exporter of coal as the sector adjusts to lower domestic coal demand, thereby "have far reaching implications for coal exporters."

On a more positive note, South East Asia's coal demand is expect to jump by 120 percent by 2040, with coal becoming the primary fuel for power generation. With the exception of Indonesia, that coal demand will have to be satisfied by imports. The WEO also points to the demand for imported coal from new coal plants being built in places like the UAE, Iran, Jordan and Egypt.

Australia will not have it all its own way in the traded coal sector. Russia for example is seen as having the potential to expand its market share. By the 2030s, Russia is expected to overtake Indonesia as the second largest coal exporter. Russia has advantages such as some of the lowest mining costs, depreciation of the rouble and investment into new mines and port infrastructure. The Russian coal sector has attracted investment from Japan and India.

All in all, the outlook for growth in demand for Australian coking coal seems to be indisputably positive. The WEO also says that the outlook for demand for Australian thermal coal "is consistent with some mining development in the Galilee Basin". Nevertheless, the generally positive outlook for Australian thermal coal exports could be impacted by greater than expected competition from Indonesia, Russia and even from China.

Where to from here?

The latest (December 2018) forecasts from the Office of the Chief Economist in the Federal Industry Department suggest a reasonably soft landing for coal prices over the next couple of years. The hard coking coal spot price was sitting comfortably above 200 USD/tonne during Februaryy 2019 and the Office of the Chief Economist is still forecasting a healthy average price out to 2020 of 145 USD/tonne. The spot price for Newcastle quality thermal coal in February has been in the range 90-100 USD/tonne and the Office of the Chief Economist is expecting an average spot price of 74 USD/tonne in 2020. Earnings in Australian dollars will of course be determined by what happens to exchange rates.

Queensland Treasury in their 2018-19 budget projections was counting on coal to deliver $12 billion in royalties over the next four years. Over the same period, NSW Treasury has included $7 billion in its forward estimates. In December, both states released their mid year budget reviews. Queensland upgraded its coal royalty estimate for 2018-19 by 20 percent to just under $4.3 billion and over the next four years expects coal to deliver $14 billion in royalties. NSW upgraded its royalty estimate for 2018-19 by nearly 12 per cent.

Investor interest, supply scarcity, coal quality and a healthy price outlook are coming together to produce a heightened interest in coking coal assets in Queensland. It also seems that the anti-coal NGOs are going to focus their resources into attempting to block new and expanding thermal coal projects. In introducing a Bill into the Queensland Parliament recently to ban coal mining in the Galilee Basin, a Greens MP spoke of phasing out mining of thermal coal. There was no mention of coking coal. Nevertheless, the WEO demonstrates that there is going to be a healthy demand for good quality thermal coal out of New South Wales and Queensland to supply fuel for the fleet of new coal-fired power stations in Asia.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
McCullough Robertson
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
McCullough Robertson
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions