Putting paid to “populist” arguments that coal is in terminal decline, BREE projected that coal exports would add $53 billion to national income in 2018-19, up from $40 billion in 2013-14.
The Australian coal industry is expected to adapt to low prices, cost pressures and high dollar.
Thermal coal export volumes are projected to increase from 195 million tonnes in 2013-14 to 239Mt in 2018-19, while exports of metallurgical coal are expected to rise from 181Mt to 195Mt in the same period.
All this was underpinned by what BREE saw as Asia’s continued industrialisation and urbanisation.
Debunking what the Minerals Council of Australia called “the myths peddled by anti-coal activists and myopic commentators”, BREE highlighted that coal will remain a primary source of electricity generation worldwide – including in China and India – and fossil fuels will be the "engines of growth" in developing Asia.
It was also reinforced that coal would play an increasing role in the electricity mixes of newly developing Asian economies including Bangladesh, Pakistan and Vietnam.
“Renewables cannot meet the pace of growing global demand, much less displace coal,” the MCA said in its analysis of the BREE report.
Meanwhile, the BREE report also noted that affordable and reliable electricity was essential to improved living standards, industrial development and lower incidence of respiratory diseases.
“High-cost renewables, conversely, can restrict access for the world's poorest people,” the MCA said.
Coal would also continue to dominate China's electricity mix; while China's suite of policies to reduce air pollution was seen as an opportunity rather than a threat to Australian exports of high-quality coal. China's coal plants under construction or approved exceed Australia's entire installed capacity.
MCA pointed out that many energy analyses – including the "stranded assets" argument – focus purely on China and ignore the considerable future impact of Indian coal demand.
“Further, the large capital outlay in the Galilee Basin is likely to be justified,” the MCA said.
“The evidence is overwhelming. Coal is here to stay, and residents of both the developing world and Australia will benefit,” the MCA said.
In the BREE report’s wider consideration of the mining industry, it stated that between 2003-04 and 2013-14, mining’s economic contribution (gross value added) increased by almost 80% ($72 billion) – over 50% higher than the second largest contributor to growth.
Debunking what the MCA called “lazy” claims about “Dutch disease” and the “resource curse”, the new BREE report confirmed that between 2003-04 and 2013-14, Australia’s mineral and energy export earnings increased 260%, reaching $195 billion in 2013-14; and that the industry was now “transitioning from a period of substantial investment to one of increased output”
It said the industry is moving from “being a growth engine to being a foundation of the economy”.
“While the investment phase has lasted around five years, the production phase of the boom is going to endure for a considerably longer period as many of the large projects undertaken have very long operating life spans,” BREE said.
BREE also noted that, despite softer industry conditions and increased global competition, the “prospects for the resources and energy industry remain positive” – although companies were still being forced to adjust with a core focus on production and increased productivity.
