The Asia Miner

JUN 2018

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

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Page 10 of 51

the asia miner • volume 15 • issue 2 9 FEATURE: Future of coal Thermal coal prices have jumped in 2016. Image source: Thomson Reuters Eikon analysts warn that the coal mining industry is on shaky ground. Basically, what goes up, must come down … again. It cannot be denied, nor ignored, that the future of power generaƟon is looking green, with an impetus for cleaner technology such as gas, solar, wind, and even Energy from Waste (EfW) picking up pace across the globe. China itself is intensifying its war on smog and polluƟon, with a push to boost cleaner energy consumpƟon and limit the use of coal. Enter stage right: the country's huge gasificaƟon program, which aims to move millions of households and the Chinese industry from coal to gas. The future is unclear, at best. Even the world's second largest mining company, Rio Tinto, is shedding its coal operaƟons in Australia, selling its final Australian coal asset – the Kestrel underground coal mine in central Queensland – for AU$2.9 billion. This followed the sale of the Hail Creek coal mine and two other coal development projects in Queensland. South32, the Perth-based miner spun out of BHP Billiton, is also in the process of selling its thermal coal assets in South Africa. Then there's Adani – the Indian energy giant – that cannot get a foothold in Australia to develop its Carmichael coal mine in northern Queensland due to mounƟng and ongoing opposiƟon, not only from the Australian populaƟon and the environmental movement, but now also from Australian poliƟcal parƟes. It seems that coal miners are adopƟng one of two disparate strategies, either exit the business in a highly visible way or sit Ɵght and keep as quiet as possible. GREENING AND INNOVATION– A MATTER OF SURVIVAL The coal industry and its operaƟons have for many years worn the moniker of being environmentally unsound and a "filthy" industry. A moniker that seems to cast a deeper shadow on the sector more so now, than ever before. Continued global pressure from environmental groups as well as local communities where mining operations are based, not to mention a not so perfect environmental track record over the decades, has made many major investors uneasy with being associated – financially or otherwise – with the industry. Late last year, Australia's "Big Four" banks – Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), ANZ, and Westpac – have announced that they would not finance the Adani project. NAB was the first Australian bank to develop a formal policy to stop financing new coal mining projects, ciƟng that the move was borne of the bank's recogniƟon that it has "an important role to play in the orderly transiƟon to a low-carbon economy". According to NAB's Sustainability Report 2017, 5% of its A$12.5 billion spending on the resources sector went to coal mining. These pressures are forcing coal mining companies to rethink and design operaƟons that are aligned with environmental pracƟces, as well as being economically viable in the current market. "… coal miners [are] enjoying their best returns, as strong Asian demand and tight supplies are sending prices up"

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