The coal divestment lobby has stopped campaigning against BHP Billiton and Rio Tinto, which have been quietly selling their coal mines and are unlikely to approve new ones.
While neither company has publicly stated they are exiting from coal used for power stations, both have cut their exposure over the past two years as prices have declined and public opposition grown.
"BHP and Rio have pretty much got out of thermal coal, but most people in Australia, particularly the politicians, have not woken up to this fact," said the chief executive of 350 Australia, Blair Palese, one of the main divestment groups. "They [BHP and Rio] have moved away from thermal coal and in doing so have sent a very strong signal to the market."
Analysts say Rio and BHP have decided they want to reduce their investments in thermal coal for financial reasons but don't want to jeopardise sales of coal mines by signalling they think coal has little future.
"Rio and BHP are still out there flying the flag for coal, but I think they are repositioning behind the scenes," said Tim Schroeders, a senior analyst at the Pengana Global Resources Fund. "Both are clearly moving away from thermal coal, but it's a case of not wanting to spook potential buyers, so they are never going to come out publicly and say they are divesting coal."
Coal's future as a source of energy has been at the centre of the UN climate change talks in Paris, where Indian negotiations say it is vital to provide electricity security for it growing population and Europeans argue for a more rapid phase out of fossil fuels.
Sell downs
Rio has been the most aggressive. The company has sold nearly $US2 billion ($2.8 billion) of thermal coal mines, disbanded its stand alone energy division and is considering selling its remaining thermal coal mines in the NSW Hunter Valley.
BHP jettisoned a large portion of its thermal coal assets in the South32 spin off. Its "energy coal" division was the smallest revenue contributor last year at just 6 per cent.
An analysis provided to The Australian Financial Review show Rio's thermal coal production has fallen 85 per cent since 2008 and BHP's output has halved.
"The exits have been done very cleverly as BHP and Rio have not really shown their hand at any point," said Tim Buckley, a former Citigroup analyst who is now a director at the Institute of Energy Economics and Financial Analysis.
In recent months Rio have been stressing the strong future for thermal coal, while making it clear they are a willing seller. "Coal demand is not going to disappear," Rio's head of copper and coal Sebastien Jacques told a Bloomberg forum in Sydney last week.
Later in his speech, Mr Jacques questioned if coal was an appropriate business for Rio. "If you have a big chequebook, I'm more than happy to take your name," he said.
A spokesman for Rio said the company had nothing to add beyond the comments made by Mr Jacques.
'The right price'
Rio began selling coal mines in October 2013 with its 50 per cent stake in the Clermont thermal coal mine for $US1.3 billion. If followed up with the $US606 million sale of its 40 per cent stake in the Bengalla mine in September this year.
The company has sold out of Mongolian coal miner South Gobi Resources and the disastrous Riversdale project in Mozambique.
Mr Jacques dodged questions about further thermal coal sales after his speech last week, saying every asset was for sale "at the right price", while adding he believed thermal coal prices were unlikely to recover for five to seven years.
BHP has retained sizeable metallurgical coal assets in Queensland, which is used to make steel, but sold its thermal coal business in South Africa when it spun-off assets into a separate company, South32.
It has retained the giant Mt Arthur mine in the Hunter Valley and Cerrejon Coal in Colombia, but is selling the San Juan thermal coal mine in New Mexico. In its third quarter production report BHP said its thermal coal output would be flat this year.
In late September BHP endorsed a goal to limit global temperatures rises to 2 degrees and tested how its portfolio would be affected by strong emission reduction targets. While it saw a strong future for uranium and natural gas, it forecast thermal coal demand would be 20 per cent below its long-term average.
A spokesperson for BHP declined to comment further on its outlook for the coal business, pointing to its September climate change statement.
Thermal coal prices have fallen more than 60 per cent since peaking in 2011 to be trading below $US55 a tonne. Falling thermal coal demand in China and a switch to natural gas in the United States is behind the big price falls, leaving the global market heavily over-supplied.
China's coal consumption fell 4.7 per cent over the first 10 months of the year, while imports were down 30 per cent over the same period.
Lucky they only work for Tire 1 clients..................lol
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