Australia’s two biggest thermal coalmine projects in Queensland are commercially unviable as India faces power generation issues, a report says
Australia’s two biggest thermal coalmine projects in Queensland’s Galilee Basin are commercially unviable, a report says.
As Chinese demand slows and India faces power generation issues, the Galilee Basin in central Queensland is essentially unusable, an Institute for Energy Economics and Financial Analysis (IEEFA) report shows.
The report says the prospect of India being the next big coal import market is now under a cloud as its coal-fired power generation industry encounters financial problems.
IEEFA director of energy finance studies in Australasia Tim Buckley said evidence is mounting that coal mining in Australia is entering a structural decline following steep price falls for the commodity.
“The financial justification for Galilee Basin Coal is based on flawed economic assumptions, including a reliance on the increasingly uncertain prospect of India being able to continue to finance and economically justify building imported coal-fired power stations,” Mr Buckley said.
The report contributes to growing unease about the financial viability of Australian coal exports, he said.
“India’s perilous economic and financial situation create further uncertainty for companies relying on its ability and willingness to import coal, with its associated implications for inflation, current account deficits, economic instability and energy security,” Mr Buckley said.
The report shows that imported coal would need to be priced at double the wholesale price of India’s electricity and would not alleviate India’s energy poverty.
Initial approvals have been granted to Waratah Coal-China First and GVK Hancock to mine in the Galilee Basin.
This would put an extra 70 million tonnes of coal each year – worth $1.4 billion to $2.8 billion – through the Abbot Point port.