Don’t count the Australian coal industry down and out just yet.

 

A report prepared for the Mineral’s Council of Australia by Commodity Insight predicts the demand for metallurgical coal will grow by 7.5 million tons each year from now through 2030.

 

To put that kind of growth into perspective, it is similar to a huge export mine coming online each year for the 12-year period. According to the report, that represents around 56 percent of the nation’s current metallurgical coal exports.

 

What’s causing this increase in demand? Growth in China and India, coupled with the inability of both nation’s domestic coal producers to keep pace with that demand.

 

Tania Constable, chief executive officer of the Mineral’s Council of Australia, lauded the report’s findings, saying it represents a huge opportunity for the nation’s economy as a whole.

 

According to government figures, Australia made a record breaking A$61 billion in 2017 as a result of exporting its coal to markets in Asia.

 

Australia ranks fifth in the world in terms of coal production, behind China, India, the United States and Indonesia. Most of Australia’s coal is shipped out of the country overseas. In 2017, Australia sold 147Mt of metallurgical coal on the foreign market.

 

China and India are the biggest importers of Australian metallurgical coal. By themselves those two nations buy 50 percent of the metallurgical coal that Australia exports. Japan, South Korea and Taiwan area the other leading importers of Australian coal.

 

A recent article in the Financial Times quotes Wal King, chairman of Terra Com, as saying that the world will continue to demand coal in order to meets its needs to generate power and produce coal well into the foreseeable future. Terra Com is an Australian coal mining firm that produces thermal coal, which is used in power production facilities to create electricity.

 

The report does caution that Australia needs to examine several issues in order to keep its coal industry growing. Among those issues are the expensive and time consuming process of getting a coal project approved and the vast amount of red tape that companies have to deal with in order to get coal out of the ground. New mines will also have to come online and infrastructure such as railroads and highways be built so the product can be moved to market, the report states.