Matt Canavan's optimistic coal forecast contradicts his own department

Extract from The Guardian

Matt Canavan

Minister says ‘we’d be mad not to’ mine Galilee basin, despite report showing steep price drop from 2020

Gareth Hutchens

@grhutchens

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Mon 2 Jul 2018 17.53 AEST Last modified on Mon 2 Jul 2018 20.26 AEST

Matt Canavan’s claim that new coal export figures strengthen the case for Adani’s Carmichael mine is not backed up by a departmental report. Photograph: Mick Tsikas/AAP

A senior federal minister has claimed new coal export figures strengthen the investment case for Adani’s Carmichael coalmine and the development of Queensland’s Galilee basin, but a report from his own department appears to show the opposite.
The Department of Industry, Innovation and Science released a report on Monday that included projections for global commodity prices and volumes.
A story in the Australian claiming coal was set to regain its spot “as the nation’s biggest export earner”, overtaking iron ore in 2018-19, quoted the resources minister, Matthew Canavan, as saying “the market conditions are right” for Queensland’s Galilee basin to start digging up large amounts of coal.
“At current prices we’d be mad not to open up the Galilee basin as soon as possible,” he was quoted as saying.

“Opening up the Galilee would generate 16,000 direct mining jobs and tens of billions in taxes.”

The report says the combined value of metallurgical and thermal coal exports will be $60.2bn in 2017-18, behind iron ore at $61.8bn.
It says coal exports will be slightly lower at $58.1bn in 2018-19, and that iron ore earnings will be even lower at $57.7bn, as falling iron ore prices drive export earnings lower.
The Australian characterised that event as coal reclaiming its mantle as the nation’s “top export earner”.
But the report says coal export earnings will soon drop below those for iron ore again, as global coal prices fall.

In 2019-20 coal export earnings will be just $51.1bn, while iron ore earnings will be $55.4bn.
The report cites a projected decline in the global price for thermal coal as the reason for the drop in coal export earnings.
The value of thermal coal exports is expected to decrease by 14%, from $23bn to $19bn, in 2019-20.
The spot price of thermal coal is likely to fall from an average of US$99 a tonne in 2018 to US$74 a tonne in 2020, according to the Department of Industry.
“The sharp decline in 2019–20 export earnings will be the result of a forecast decline in prices, which is expected to more than offset the impact of minor growth in the volume of thermal coal exports,” the report says.
The report says metallurgical coal export earnings are also forecast to decline over the next two years, by 5.7% to $35bn in 2018–19, and by another 11% to $32bn in 2019–20, as lower prices offset rising export volumes.

The metallurgical coal spot price is forecast to decline from an average of US$193 a tonne in 2018 to US$148 a tonne in 2020, with the impacts of improved supply combined with weakening demand from China expected to outweigh growing demand from India.
The shadow energy minister, Mark Butler, said the figures from the report were being misrepresented.
“Minister Canavan and PM Turnbull may think it’s their job to present this as a booming market, but the Australian people, especially those living and working in thermal coal communities, deserve to be treated with respect and intelligence,” Butler said.

“This is not a booming market, it is one in long-term structural decline as the world moves to lower-pollution forms of electricity generation to address climate change.

“We need to manage the ongoing transition in our economy, including the long–term structural decline of thermal coal, with policies to create new jobs and industries and deliver a just transition to thermal coal communities. Anything short of that is selling workers, communities and our collective future short.”