ASIA Demand for Energy will support Australian Coal Industry and offer opportunities for Australian METS firms in China and India
Chairman of Austmine member Manufacturship Group, Bede Boyle has a long involvement with the Australian Coal Industry and is a Director of Coal Ventures Limited. He was invited to address the IHS Power-Coal Dialogue on Asia Coal Market Outlook in Sydney, 16 June 2015.
The Australian Coal Industry is experiencing an extended period of low prices. When do you see future upside for the industry and METS suppliers?
Bede highlighted the fundamental and historic shift occurring in the world’s economic activity from West to East and observed that China and India have already emerged as both:
- Importers of Australian coal, and
- Major investors in Australian coal mines and export infrastructure
He highlighted the truly astonishing rate of GDP in China and India:
- 1990 China and India together accounted for less than a tenth of world GDP
- 2010 China and India accounted for almost a fifth of world GDP
- By 2020 China and India are projected to account for a quarter of world GDP
- By 2025 ASIA as a whole, is projected to account for almost half of world’s GDP
China overtook the United States in 2014 as the world’s largest economic power when measured in real purchasing-power terms. China is already Australia's largest export market for both goods and services, accounting for nearly a third of total exports, and a growing source of foreign investment.
India is the world's largest democracy and is a market of 1.2 billion people. Its youthful population, diversified economy and middle class growth trajectory present significant opportunities for Thermal Power Generation to supply India’s demand for electricity.
Over 180GW (China 70GW and India 113GW) of new coal-fired generation is expected to increasing annual world coal demand by over 500Mt by 2019.
Where do you see opportunities for Australian METS?
Regarding opportunities for Australian METS, COAL IN INDIA 2015 is a major study by the Office of the Chief Economist, Australian Government, Department of Industry and Science, June 2015. The context of the study was highlighted by a delegate from Australian Government Department of Industry. The study addresses India government strategy to address climate change and to provide economic access to energy. India’s desire to improve the productivity and safety of domestic coal mines through advanced technology may present an opportunity for Australia’s mining equipment, technology and services [METS] sector.
However, Bede observed that “it is NOT all about CHINDIA. The Philippines, Malaysia and Myanmar have over 14GW of coal-fired generation capacity under construction or approved which will be supplied by imported coal.”
ASEAN is expected by ANZ to replace China during the next 10 years as the world’s manufacturing hub and ANZ expects it to become the fifth largest economy in the world by the end of the decade.
Australia’s closest trading partners are members of the ASEAN Economic community of 10 Asian nations including Malaysia, Singapore, Indonesia, Philippines, Thailand, Brunei, Lao PDR, Myanmar, Cambodia, and Vietnam.
Vietnam has 27 gigawatts of coal-fired electricity generation capacity under construction or approved. Vietnam is currently a net coal exporter, but is projected to become a net importer as production fails to keep pace with consumption.
Malaysia has 5.2 gigawatts of coal-fired electricity generation capacity under construction or approved. These plants are being developed as part of a strategy to meet growing energy requirements and diversify fuel sources.
Similarly, the Philippines and Myanmar have 4.8 gigawatts and 4.2 gigawatts of coal-fired generation capacity under construction or approved, respectively.
Will METS benefit from The China Australia Free Trade Agreement
Bede noted The China Australia FTA was signed on 17 June 2015 and will cover 23% of Australia’s total trade. China is committed to modernising its Coal and Power Industry across the key dimensions of safety and environmental management. China opportunities for METS include methane monitoring and drainage and power generation. Mine safety technologies and systems is another area with significant potential.
Bede’s concluding observation was Australian METS is indeed in the Right Place at the Right Time to capture opportunities in China and India.