Business

What the mixed signals about mining's future really say

THE signals being sent from various quarters about the mining boom are confusing.

For example, the Centre for Policy Development reports that the current utilisation of Queensland coal ports is just 65%, as opposed to the industry average of 85%.

It's that and the projection that coal capacity would expand six-fold if all proposed mining were to go ahead that may well be behind BHP's decision to abandon plans to develop a coal export terminal at Abbot Point near Bowen.

According to CPD's projections, Hay Point near Mackay will serve the industry's needs until at least 2020, and then only if the global thermal coal market expands and Queensland doesn't lose market share to cheaper producers.

On the other hand, the Queensland Resource Council is reported to have said: "Although coal prices are down (actually by 22% since 2010), demand is forecast to grow at 3-5% per annum into the foreseeable future."

Back to the CPD: long-term World Bank forecasts are for coal prices to be in the range of $US70 per tonne when many of Queensland's new projects are relying on $US120 per tonne to be viable.

Confused? Then there's the elephant in the room. China has decided to cap energy consumption by 2015.

Just how are forecasts by think tanks like the CPD and QRC - and the World Bank for that matter - going to stack up in light of this?

How are our miners going to reduce production costs, particularly in light of the possibility that the incoming head of the US Federal Reserve, Janet Yellen, may phase out Bernanke's quantitative easing policy of printing cheap money in order to stop the housing bubble and record share prices there.

The effect will be a stronger US dollar and anincreased cost of mining equipment - imports of which by the way reduced to a trickle in the latest balance of trade numbers, despite commodities remaining by far our biggest export earner.

And where does all this leave Wiggins Island?

This may seem like wrist-slashing stuff for the coal industry, although QRC's forecast of 5% per annum growth would see coal exports double in 14 years.

If the industry can get on top of its out-of-control production costs and hang onto its global market share, the future may well be rosy.

Think of how quickly changes to traditional methods are made these days. Where do you reckon the coal industry will look to attain profitability and continue to contribute to our export earnings?

Watch this space for news of increased robotics in coal production, reduced wages and giant government handouts both direct (like those to the car industry) and by way of pre-production tax concessions that will dwarf what's currently on offer.

As the value of our dollar comes back to where it should be, you'll see cost inflation and a determination by treasury to find ways of keeping our balance of trade numbers acceptable.

And there's nothing on the horizon that will replace the mining export earnings which Australia has grown accustomed to relying on for more than a decade.

Topics:  coal, gladstone business, mining, mining boom, resources




Police arrest teen girl found driving stolen car

She was found driving a stolen car at Aerodrome Rd.

$9.8m boost to strengthen networks for Gladstone industries

Glenn Butcher MP has announced a $9.8 million upgrade to the power supply infrastructure.Photo Mike Richards / The Observer

The Boyne Smelter will receive a $9.8m network boost

Latest deals and offers

The Big Music Quiz gives The Block a run for its money

Darren McMullen hosts the TV series The Big Music Quiz.

NEW challenger in TV ratings race shakes up Sunday night.

Britney Spears calls Carpool Karaoke appearance "awkward"

Britney Spears admits her Carpool Karaoke segment was "awkward"

Mariah Carey's sister Alison arrested for prostitution

Mariah Carey's sister has been arrested on charges of prostitution.

VIDEO: What did Thor do during Captain America: Civil War?

Short explains why Thor wasn't in Civil War film.

Hilarious mockumentary features star of the film Chris Hemsworth

Meet Toowoomba's top exotic dancer

WINNERS ARE GRINNERS: Exotic dancers (from left) Alice Morgan, Celeste and Frenchie are heading to the United States after competing in Miss Vault 2017.

Dancers vie for top spot at Toowoomba's only strip club

That's a wrap: Gympie Muster celebrates 35 years in style

Caitlyn Shadbolt performs at the Muster Club on Sunday August 28 at the Gympie Muster.

Country music festival blessed with great weather and bumper crowds

REVEALED: Pat Rafter's $18m Coast house on the market

Check out the photos of the Coast's most expensive property for sale

The "correction we had to have" in Gladstone's rentals

UPWARD MARCH: The rental vacancy rate in Gladstone has improved for the first time in more than a year, providing a confidence boost in the market.

Vacancy rates improve with signs that things are getting betterF

ISLAND FOR SALE: Cheap Fraser Coast island drops price again

Suna Island in the Great Sandy Strait will be auctioned by Ray White Hervey Bay on Saturday morning.

This is the cheapest island you will find for sale in Australia

How a family home can fit on a 250sq m block

This is what you can build on 250m2.

Here's the floor plan of a home built on 250sq m

$100m plan for Curtis Island 'world class' luxury resort

$100 million resort: Top views at Turtle Street at Curtis Island.

"At the moment we think it meets all the town planning approvals.”

Gladstone landlords in trouble with Bechtel job losses

"If a big project was announced tomorrow I wouldn't want to see it"