THE federal government's coal price cap and the NSW government's "reservation" scheme ordering mines to supply power stations are starting just as the industry comes to grips with falling prices, sagging export volumes and rising operational costs.
Although the NSW Minerals Council this week highlighted jobs figures showing the state's coal industry enjoying its highest employment levels since the previous peak in 2014, history shows that employment tends to rise and fall in line with prices.
The most recent edition of the weekly industry journal, Australian Coal Report, says spot prices of top-quality Newcastle thermal export coal have steadied at about about $US185 ($275.90) a tonne, following almost three months of falling prices.
"At $US184.42 ($275.42) a tonne, the index is now done by $US244.85 ($365.31) a tonne since its recent peak at $US429.27 ($640.41) a tonne on December 9 ..." ACR said.
"This lower liquidity in the Newcastle market for 6,000 kilocalorie thermal coal has gone hand in hand with a balanced market position as the northern hemisphere winter that drives energy demand reaches its close."
What appears to be a phased relaxation of the Chinese ban on Australian coal is also feeding into the market, with "increased interest from Chinese buyers" for the lower-energy coal they generally buy, as well as for metallurgical coal for steelmaking.
ACR reported shipping data showing at least 22 bulk carriers with almost two million tonnes of Australian coal were scheduled to have arrived in China by the end of this month.
Although the export outlook is not as strong as it was, the industry's main concern is the price cap of $125 a tonne and the reservation scheme that will see all NSW mines except Idemitsu's Boggabri having to put aside coal for the state's four coal-fired power stations.
Boggabri reportedly convinced the government all its output was pre-sold.
The NSW government's Coal Market Price Emergency (Directions for Coal Mines) Notice 2023 says: "A coal supplier must prioritise, over other coal supply agreements, the delivery of coal under a coal supply agreement to a coal fired power station that has a stockpile of coal that is expected to be less than the expected consumption of coal by the power station for the next 30 days."
When state government royalties are included, ACR says a number of producers are likely to have production costs of $125 a tonne or more, with Centennial Coal imposing "strict cost control measures ... as it seeks to curtail rising input costs for labour, fuel and equipment".
Major NSW producer Glencore has continued its criticisms of the price caps and reservation policy, which directs the power stations and the mines to produce monthly reports to the government until June 2024.
Glencore says it produces 30 per cent of the state's thermal coal but must provide 65 per cent of the shortfall.
"It is clear the NSW Government is intervening into a market that it doesnt understand, and this intervention will have long term detrimental impacts on the domestic market," a Glencore spokesperson said.
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