The NSW coal industry
The New South Wales (NSW) coal mining industry has enjoyed a period of great prosperity over the past few years. The industry produced a record 188.8 million tonnes (Mt) of raw coal, yielding 145.4 Mt of saleable coal in 2009-10. This accounted for $13.2 billion in income, or 80% of the total value of the NSW mining sector. Exports of 109.9 Mt of thermal and metallurgical coal totalled approximately $14.1 billion in value, while domestic consumption of 34 Mt of coal by the power, steel and other industries totalled $1.8 billion in value. The remaining saleable coal was placed into mining stocks.
The coal mining industry continues to be a major employer in NSW. At the end of June 2010 there were 19,087 people employed in the five coalfield regions across NSW, an increase of 2173 positions (12.8%) compared with June 2009. This is the highest level of employment in the industry in more than two decades, with at least two to three times this number indirectly employed through the provision of both mine and non-mine related services.
The coalfields of the Sydney-Gunnedah Basin contain almost all of the coal resources in NSW, with smaller quantities in the Gloucester and Oaklands Basins. Recoverable coal reserves in NSW exceed 11.5 billion tonnes. These reserves are contained within 62 operating mines and colliery holdings and more than 30 major development proposals.
The major coal deposits in NSW range in rank from bituminous coking and thermal coals to sub-bituminous thermal coals. The quality of thermal coals range from medium to high ash, low-sulphur coal used for domestic power generation and cement manufacture; to low to medium ash, high-energy export quality coal. Prime, low volatile, hard coking coal and low ash, semi-soft coking coal, used for iron and steel production, supply both the export and domestic markets.
Industry TrendsForecasts by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) predict continued solid growth in demand for both thermal and metallurgical coals over the next couple of years.
After growing strongly over the past few years on the back of higher mineral and energy commodity prices, Australia’s economic growth eased somewhat in 2008–09. However the Australian economy survived the Global Financial Crisis (GFC) better than nearly all, if not all, economies. An important reason for the excellent performance of the Australian economy post GFC was the strong performance of the mining industry, including that of NSW and the large financial surplus the Commonwealth Government had to sustain growth in the economy.
Exports of high quality thermal coal decreased slightly during 2009-10, whilst export demand for metallurgical coal increased by almost 36%. Over the past decade the strength of coal exports can be attributed to high demand for thermal coal and this trend is likely to continue for the foreseeable future. Domestic coal sales decreased slightly from 34.9 Mt in 2008-09 to 34.0 Mt in 2009-10.
The overall positive outlook for the NSW coal industry is the product of favourable geology, well-developed infrastructure, low average operating costs, use of leading edge exploration and mining technologies and the availability of a skilled workforce.
Major investment by the NSW Government and private industry to expand and upgrade transport and loading facilities will ensure coal production and exports are well supported into the future.
The 188.8 Mt of raw coal produced in NSW in 2009-10 represents a 3.7% increase from the previous year's production of 182.0 Mt. Raw coal production from open cut mines rose by 6.0% to 126.0 Mt from 118.9 Mt the previous year. Raw coal production from underground mines decreased slightly by 0.5% from 63.1 Mt in 2008-09 to 62.8 Mt in 2009-10.
There is a large and significant difference between raw and saleable production from open cut mines (31.4 Mt) compared with the difference between raw and saleable production from underground mines (12.8 Mt). This reflects the greater recoveries achieved from mining selected seams or working sections in underground mines. Open cut coal recoveries averaged 75% compared to almost 81% for underground operations.
Coal exports in 2009-10 increased to 109.9 Mt from 103.3 Mt the previous year. This reflects, in particular, an improvement in metallurgical (coking) coal exports, which increased by 7.6 Mt to 28.8 Mt. During the same period thermal coal exports decreased slightly from 82.1 Mt to 81.1 Mt. In the past decade NSW coal exports have increased by 44.9%.
During 2009-10, export coal represented 75.6% of the total saleable coal production of 145.4 Mt. Thermal coal exports contributed 81.1Mt (73.8%) of total coal exports, compared to 2000-01 when only 52.5 Mt was exported. Coking coal exports increased 7.6 Mt to 28.8 Mt in 2009-10, accounting for 26.2% of exports.
NSW exported coal to 21 countries worldwide during 2009-10, two less than the previous year. Japan has been the largest single export destination for the past 20 years and dominates both thermal (56.5%) and coking (42.3%) coal export markets.
Other Asian countries, such as The Republic of Korea and Taiwan, have maintained their position as important customers, accounting for around 28% of all exports. China and India are increasingly significant and now account for 13.5% of all exports. Thermal coal accounted for 80.6% of coal exports to Korea and Taiwan and 46.7% of coal exports to China.