today, page-8

I think you are on the money SSW. Here is another example of what is causing the current sentiment because various journo's a writing stories such as this one in yesterdays The Australian. Unfortunately academics prepare these studies and they are quite often proven to be way off the mark and usually follow the galss half empty principle.


Wake-up call on new coal projects

Sarah-Jane Tasker |
The Australian|
May 06, 201412:00AM

AUSTRALIAN coal projects yet to be developed will struggle to be funded given the sector is in a “structural” downturn, the author of a new industry report says.

Tim Buckley, director of ­energy finance studies, Australasia, at the Institute for Energy Economics and Financial Analysis, has outlined in a report that two mines planned in the Galilee Basin are fundamentally unprofitable and commercially unviable.

Hancock Coal, owned by Indian company GVK and Gina Rinehart’s Prospecting, is developing the Kevin’s Corner and Alpha thermal coalmines in Queensland’s Galilee Basin.

“The financial justification for Galilee Basin coal is based on flawed economic assumptions, including a reliance on the increasingly uncertain prospect of India being able to continue to finance and economically justify building imported coal-fired power stations,” he said.

“Australia risks funding major new thermal coal projects on what I consider is a flawed assumption on ever increasing Indian import coal demand.”

Mr Buckley said he was trying to provide a different perspective to challenge the general wisdom behind the development of these projects.

“The thermal coal price is half of what it was when GVK acquired its interest in the Galilee,” he said.

“If the price of coal has halved then the economics of those projects has dramatically deteriorated. A lot of people were talking about coal being in a cyclical downturn, I would argue it is in a structural downturn.”

Mr Buckley said the report was a wake-up call to investors and industry, questioning the economic basis for an increasing number of proposed coal projects in Australia.

“The report found that imported coal would need to be priced at double the wholesale price of India’s electricity, which categorically discredits the nonsense arguments that it might alleviate India’s energy poverty,” he said.