Oct 29, 2017

Growing demand for coal in South-East Asia

Growing demand for coal in South-East Asia

The International Energy Agency’s Southeast Asia Energy Outlook report brings good news for Australian coal producers, with expected increasing demand, says Minerals Council of Australia executive director – coal Greg Evans.

He said the 10 nations that make up the ASEAN region were exhibiting strong population growth, increasing urbanisation and robust economic growth, with the region’s economy expected to triple in size to 2040.

“This has significant implications for energy demand which will be served by existing resource endowments but also by increasing imports,” Mr Evans said.

“Currently the mainstays of Australian coal exports, both metallurgical and thermal, are the traditional north Asian markets of Japan, China, Korea and Taiwan – with India also growing in importance.

“However South-East Asia will gain in significance for Australian producers with inroads already established in Vietnam, Malaysia, Thailand and the Philippines. This trade was valued at A$1.7 billion in 2016-17.”

The latest International Energy Agency (IEA) report indicated the region had been the third-largest investor in coal-fired power generation behind China and India since 2000, at US$66 billion.

“Projections under the IEA’s New Policies Scenario are for coal’s share of electricity generation to increase from 35 per cent today to over 40 per cent by 2040. In addition, in 2040 coal is projected to be the second largest fuel meeting primary energy demand after oil,” Mr Evans said.

“To meet the challenges of reducing carbon dioxide emissions, the majority of the new power station build will be High Efficiency, Low Emissions (HELE) technologies with a total increase of 100 GW in coal fired capacity in the outlook period to 2040 – more than four times Australia’s current total coal fired capacity.”

With coal demand increasing in the region by near 4 per cent annually to 2040 and declining Indonesian exports over the same period (from 290 Mtce in 2016 to 170 Mtce in 2040) the IEA expects Australia will increase its exports by more than 15 per cent to 2040.

“Australia is an efficient coal producer, it is well positioned to deliver to Asia and provides a high quality coal suitable for new generation coal plants and steel making,” Mr Evans said.

“This latest report confirms the underlying demand for coal and the considerable opportunity for Australia in the growing market of South-East Asia.”

 

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