The Asia Miner

JUL-SEP 2019

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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the asia miner • volume 16 • issue 3 35 AROUND THE REGION NSW thermal coal exports 2018. Source: DFAT STARS Database, based on ABS Cat No 5368.0, December 2018 data ©IEEFA In 2018, coal accounted for 41.9 per cent of South Korea's power generaঞon, followed by LNG with 26.8 per cent and nuclear energy with 23.4 per cent. The announcement of the new dra[ energy master plan comes on top of previous announcements that saw South Korea already making its move away from coal-fired and nuclear power and towards renewable energy and LNG. There has been a significant change in the long-term thermal coal demand outlook in South Korea since President Moon Jae-in was elected in 2017. The outlook now, signalled in the new dra[, is even more negaঞve for South Korean coal imports. April 2019 has seen South Korea's coal tax increased by another 28 per cent to KRW46/kg (US$40/t). At the same ঞme the tax on LNG imports has been cut by 75 per cent. This follows a 20 per cent increase in the coal tax in April 2018. The South Korean government is clearly aempঞng to prompt a shi[ away from coal use in power generaঞon. The coal tax is in addiঞon to South Korea's carbon price, which was introduced in 2015 via a cap-and-trade system that currently prices carbon at around US$20/t. Bloomberg New Energy Finance (BNEF) sees the South Korean electricity generaঞon mix moving from 72 per cent coal and nuclear in 2017 to 71 per cent gas and renewables by 2050.6 As the naঞon's coal and nuclear plants reঞre, BNEF foresees the electricity system becoming increasingly based on renewables, supported by South Korea's baery storage manufacturing capacity as well as gas peaking plants. South Korea's build-out of renewable energy capacity is under way. The year 2017 saw annual solar PV capacity addiঞons in South Korea cross 1 GW.9 With its long coastline, offshore wind will also play an important role in South Korea's energy future. As offshore wind costs conঞnue to drop, South Korea has inaugurated its first offshore wind farm off the coast of Jeju Island.10 In June 2018, the Energy Ministry announced plans to build 12 GW of offshore wind by 2030.11 South Korea already has 4 GW of offshore wind in the pipeline. The long-term collapse of South Korea's thermal coal imports will have significant implicaঞons for the state NSW – Australia's primary thermal coal export state. South Korea is one of NSW four main thermal coal export markets along with Japan, China and Taiwan. All other export desঞnaঞons are far behind the big four in terms of significance to the industry – the sum of all other export desঞnaঞons is smaller than any of the big four. NSW thermal coal exports to South Korea were 18 million tonnes (Mt) in 2018, down 11.6 per cent from the prior year and 35 per cent down from peak exports to South Korea in 2015. India and Asia will drive global copper growth beyond 2025, with China remaining a dominant consumer of the red metal, according to a Laঞn American commodity analyst. Sanঞago-based CRU Consulঞng Principal Analyst, Mr Erik Heimlich, said while there were some short and medium term challenges for the metal, including some current misconcepঞons on pricing and impacts of the US-China trade tensions, the longer term outlook was robust. "This will see output coming through from the mines approved for development in the past 12 months – where not much addiঞonal capacity was coming to actual market – and the spate of copper mergers and acquisiঞons will add price improvement as worthwhile assets get beer aenঞon and investment," Mr Heimlich said. "By 2025, we will start to see the first real volumes of copper use in electric vehicles, and this could absorb an addiঞonal one million tonnes a year by then. "Expect this specific EV market demand to rapidly increase to 5 mtpa." Mr Heimlich said that while there would be a slow-down in medium term copper growth, China would sঞll represent the most important copper demand growth in the next five years. "We will need to see the rest of the world grow its copper consumpঞon more rapidly and the contribuঞon to that of India and Asian countries will be important. "I expect 12 per cent of new demand in this period to come from India and around 10 per cent from ASEAN countries – stabilising copper growth globally at around 2 per cent a year over the next four years." Mr Heimlich said while copper prices had fallen below the US$6/lb level, they were in much more balance than the overall market believed. India and Asia to drive global copper growth

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