Coal Prices Off The Graph

Newcastle Herald

Wednesday February 20, 2008

LEADER

ENERGY, we are apt to forget, is one of the biggest issues facing the industrialised world today. Guaranteeing its continued supply is a major challenge and the debate over access to oil, gas, coal and uranium and over research into renewable sources intensifies each year.

As the biggest coal export port on the planet, Newcastle is a major player in this drama, and many of the global facets of the energy scramble are clearly discernible on the city's doorstep.

In recent months a number of developments around the world have coincided to produce such unprecedented demand for the thermal coal used in power stations that prices at Newcastle have broken records for four months in a row. During the course of 2007 prices rose 73 per cent and in recent days the spot price has approached previously unimaginable levels of $140 a tonne.

A few more statistics from around the world help explain this astonishing price rise. Japan, forced by an earthquake to close the world's biggest nuclear power plant last July, burned a record 5.09 million tonnes of coal in January alone. China is the world's biggest coal producer and consumer. Recent snowstorms have reduced coal output and the country has banned coal exports in a bid to meet domestic demand.

Vietnam is China's biggest coal supplier, but it has announced it will phase out coal exports because it needs the energy at home. South Africa, which gets more than 90 per cent of its power from coal, ignored decades of warnings about a looming electricity shortage and is now so crippled by brownouts and supply problems that its coalmines can't function properly. It has announced plans to ramp up imports of coal.

Floods in Queensland have slashed Australian output too, increasing the pressure on Newcastle which, like other coal ports across the globe, is struggling to satisfy increasingly desperate customers.

Contract prices will follow spot prices upwards. That will have an effect in the valley, where previously marginal mining operations will become highly profitable. An increase in applications for mining approvals is already apparent.

More mining means even greater impacts on the Hunter's environment and communities. The NSW Government which is making a lot of money from coal royalties has repeatedly been urged to do more to mitigate these impacts and to ensure the Hunter will be able to prosper in a post-coal future.

The record prices now being realised for Hunter coal add yet more weight to these persistent calls.

A bridge too dear

A MAJOR function of Tillegra Dam, some may argue, will be to drought-proof the Central Coast and provide a long-term reservoir that Sydney may one day tap. Even if this is only partly true, it seems unfair to expect little Dungog Shire Council to foot the bill for the upgrade of bridges and roads that the dam construction will require. Local need does not justify this heavy expense which ought to be borne directly by the government.