Consultancy HDR Salva said at least 40% of Australian thermal coal exports – about 85 million tonnes – were loss making at current spot prices, with half of all thermal coal from Australia produced at cash costs of more than $US65 ($A72.12) per tonne.
It was cheaper than the current Newcastle spot price of $70/t, with some operators potentially making losses of more than $25/t, HDR Salva said.
The company’s cost curve analysis for 95 Australian coal operations showed that producers would continue to struggle in the short term despite 18 months of aggressive cost cutting.
Amid all this, HDR Salva sees a surge in coal-fired power capacity coming online throughout Asia over the next five years, meaning “it’s not just a China story”
“Across Southeast Asia alone, we expect 23 gigawatts of new coal-fired power generating capacity to commence operations between now and 2018, plus Korea and Taiwan will add another 12GW of capacity,” HDR Salva chief analyst Mark Gresswell said.
“On conservative estimates, this additional coal-fired power plant capacity will require an additional 40Mt of coal supply every year.
“That doesn’t include China or India, who are each increasing coal-fired power generation by 30GW and 20GW annually.
“We believe Australian exports will be ideally placed to satisfy this demand, particularly as Indonesia, our major Asian competitor, has significantly slowed its thermal coal supply growth this year.”
HDR Salva’s analysis comes after ANZ Research revealed that China’s “purposeful shift away from coal” had pushed the commodity’s share of new generating capacity to 40% over the past 12 months – down from 75% between 2010 and 2012.
