Australia’s economy, regional jobs and local communities are expected to benefit from growing demand for the country’s world-class steel-making coal, according to a report released today by expert industry analysts, Commodity Insights.
The report, titled ‘Market Demand Study: Australian Metallurgical Coal’ for the Minerals Council of Australia (MCA) forecasts that demand for metallurgical coal is expected to grow by over 95Mt from 275Mt in 2017 to 372Mt in 2030 with China and India accounting for almost all the demand growth (equivalent to 2.3 per cent growth or around 7.5Mt per annum). This forecasted growth is approximately 56 per cent of current Australian metallurgical coal exports.
The report states that Australian metallurgical coal holds a ‘very strong position’ in the seaborne market, driven by several factors such as the higher quality of Australian metallurgical coal (particularly from the Bowen Basin, which is generally considered the best metallurgical coal in the world), proximity to key Asian markets, end-user mine equity agreements, and stability in the historically important markets of Japan, Korea and Taiwan.
The MCA stated that even based on the conservative assumptions used in the report, this demand growth represents a major opportunity for coal producers and the Australian economy.
Yet, Australia’s strong position in meeting metallurgical coal demand growth should not be taken for granted. The report notes that given competition from other suppliers, Australia will need to add or expand mines and infrastructure – particularly rail – in a timely fashion in order to fully support this growth.
The report also notes that there is no suitable replacement for metallurgical coal because of its critical role in the blast furnace process where it acts as a source of heat, a reducing agent for the iron ore and provides permeability to the blast furnace burden.
The full report can be found here.
