HOGSBACK

Aussie coal gets Trumped

It is not for nothing Trump made a point out of pulling out of the Trans Pacific Partnership.

Lou Caruana
Aussie coal gets Trumped

“We have ended the war on American energy – and we have ended the war on beautiful, clean coal,” Trump said in his State of the Union address. 

“We are now very proudly an exporter of energy to the world.”

The Donald might be more comfortable tweeting about North Korean dictators and conducting US foreign affairs and defence policy in 30-word messages, but his thoughts on coal during his State of the Union address were very timely.  

The US energy import curve inflected in the mid-2000s and the US is on track to be a net energy exporter, according to most projections.

While the US once employed 800,000 workers in its coal industry during the 1920s, today it only employs about 76,000. That is, in part, due to the great strides in automation both in surface mining and in underground coal mining that have taken place over the past 50 years.

Other forms of energy such as gas have also squeezed out coal in some areas as a feedstock for its local power stations.

This is not going to stop the US, with its vast reserves of coal in the Powder River Basin and the Appalachians, from stopping the development of its coal industry. 

It is not for nothing Trump made a point out of pulling out of the Trans Pacific Partnership.

He is hell-bent on encouraging US producers to grab some Asian market share from countries such as Australia.

Already, US giant Cloud Peak Energy has already firmed up contracts for sale of thermal coal to Japan.

Once the US reconfigures its railway and port system to handle extra coal exports from its West Coast or via Vancouver in Canada, it could emerge as a serious swing supplier to the burgeoning Asian market.

The Minerals Council of Australia has touted the recent revival of the Trans Pacific Partnership as a major breakthrough for global trade.

“It will deliver significant economic and strategic benefits for Australia - boosting exports, driving growth, jobs and investment and helping to ease cost of living pressures on Australian consumers,” it said.

This maybe so, but Hogsback thinks Australian coal suppliers cannot assume they will always have first dibs to the lucrative markets of north-east Asia or the newly-emerging South East Asian market.

   

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