The federal government has revised its thermal coal export estimates for this financial year down by 9 million tonnes off the back of restrictions on coal trade with China and is tipping export earnings to sink by $5 billion
According to the Department of Industry's latest quarterly resources and energy report, thermal coal exports to China hit their lowest ebb in almost a decade throughout September and October.
Further, damages to a loader at the Port of Newcastle – which handles a third of the nation's thermal coal exports – also contributed to recent volatility in the market. Glencore's plan to shut four mines by 2023 and a move to immediately cut local output substantially weighed heavily too.
“Coal markets are in a state of flux dealing with issues quite separate to COVID-19. Shipments of (mainly Australian) coal faced delays at Chinese ports,” the department said.
“Price differentials have changed dramatically; the bottom line for Australian coal producers is lower profitability, and the likelihood of production cuts the longer the Chinese restrictions remain in place.”
It projected coal exports would fall from 213 million tonnes in 2019-20 to 199 million tonnes in 2020-21 – below prior estimates of 208 million tonnes – and export earnings would sink from $20 billion to $15 billion.