Dirty old coal is doing it tough. Prices have tanked, legacy first world markets are eroding almost as rapidly as coal disinvestment campaigners rack up successes, and the miners' growth plans are forced into stasis by a wearying combination of financial rationalism and environmental activism. And now this most ubiquitous of fossil fuels has become global-warming tar-baby for the international gas industry.
So you could be forgiven for imagining coal is on its last legs. But the data says otherwise. In fact, Australian coal is leaving our shores in record volumes.
The latest numbers out of NSW are indicative of the national trend. While depressed pricing has forced Glencore and others to close or slow production and an estimated 5000 miners have lost their jobs, the state's two coal systems remain on pace to export at record annual volumes.
NSW coal exports rose just under 5 per cent to 133 million tonnes through the nine months to March and that leaves the state's miners on track to top the record 167.3 million tonnes that was shipped off to our region in FY14.
Patently a lot of those extra tonnes are being shifted from stockpiles that accumulated over the past two years or so and, at current prices of around $US60 a tonne, their sale might not be generating an awful lot of free cash flow.
Again, the NSW data is indicative. Across the Hunter and Illawara, miners produced nearly 30 million tonnes more than they sold in FY14. That trend has slowed a wee bit, but saleable coal production is still running about 17mt tonnes ahead of shipments. So, as anyone who has visited Newcastle Port recently will tell you, coal stockpiles continue to grow.
But the underlying point here is that the demand for Australia's coal remains just a little bit better than resilient and, for all the negative will in the world, there is no reason to think this is going to change any time soon.
And, once again, the latest NSW data tell us why that might be. Yes, exports to old and new pillars of thermal coal demand, Japan and China, fell over the nine months to March. But those falls were more than offset by increased shipments to Korea, Taiwan and India.
The coal industry reckons that shipments will probably hold at around FY15 levels through FY16 but that production will likely fall slightly over the coming 18 months before returning to long-term trend growth of around 3 per cent annually.
This view sits in comfortable alignment with the national forecaster, once called the Bureau of Resources and Energy Economics and now know as the Office of the Chief Economist (and don't ask me why?). On its numbers, thermal coal is the next growth story with Australian exports expected to rise by 15 per cent to 230mtpa over the next five years while met-coal production sits relatively steady.
The logic there is that East Asia's most mature economies, Japan, South Korea and Taiwan, are increasing their coal-fired generating but at a rate that is being outstripped by emerging economies like Indonesia, Malaysia, Vietnam and Thailand.
"Countries that have previously had low or no coal use in their energy mix in Asia have started to invest in new generators," the OCE reported in March. "This includes highly populated countries such as Bangladesh and Pakistan, which currently have very low electricity consumption per person."
And then there is the rapidly evolving Indian growth story. India is adding about 50 per cent to its coal-fired power capacity and its coal industry is struggling to keep pace with the challenge of fuelling the new stations. India was self-sustaining in coal as recently as 2008. This year it passed Japan to become the world's second biggest coal importer, buying in 200mt of coal. That number is expected to hit 250mt over the next few years.
Right now the biggest supplier to India is Indonesia, both because of cost and quality. The majority of India's generators are configured to use local high-ash coals and that is the lower quality stuff that Indonesia produces in large, low-cost volumes.
But the profile of Indian demand is changing. From 2017, all new Indian power stations will have use the new "super-critical" technologies that effectively reduce carbon dioxide emissions. The roll-out of this new generation of power technologies has already started. And these machines run best using higher-energy, lower-ash coals. And the best place to get that sort of stuff is from Australia.
That is why Adani is preparing to open the next horizon of Australian coal production in Queensland's Galilee Basin and why the impressively doggèd and well-organised anti-coal lobby is so determined to prevent that from happening.
The majority of those resisting coal's creep beyond the Bowen Basin and its sustaining expansions in the NSW home of coal, the Hunter Valley, are driven by understandable concern that coal makes an overweight contribution to carbon emissions that threaten our climate.
But miners and customers receive this blanket rejection of the coal as a First World choice and one that risks ignoring the unshakeable certainty that coal will continue to be the fuel of choice for emerging nations looking to introduce their populations to reliable, affordable power. This issue was tackled head-on late last month by India's minister for state for power, coal and new & renewable energy, Piyush Goyal. He first noted that 280 million Indians lacked access to basic electricity supply, then that the developed world had relied on low-cost coal to power its growth for 150 years, and finally that the developed and developing world needed to better share the responsibility of climate change.
"We do understand, and it is indeed incumbent upon us to protect the world to ensure a cleaner planet for the next generation," he told an energy summit in New Delhi.
"However, it is also important to understand the agony of poverty. It is important to understand the pain that the common man experiences when he is required to pay very high cost for energy."
The underlying point here is, once again, demonstrated by the data. The International Energy Agency estimates that global electricity demand could double by 2035 and that coal is likely to fuel more of that supply than either oil or gas for the foreseeable future. That is because coal is superabundant, easy and safe to move and it is cheap and getting cheaper.
Other options just do not tick all those boxes. For example, the shale revolution has left the US with a superabundance of gas. But it is not a domestic option in many corners of the emerging Asia. Importing gas in the form of LNG is an option, but it is not cost-competitive with coal and neither is it as benign a risk to move about the place.
Nuclear might have been a more attractive regional option before Fukushima but, even then, it is uncompetitive with next-gen coal power because it consumes more time and capital in construction and deconstruction.
If the IEA forecast proves anything like accurate, then the mitigation strategies being embraced wholeheartedly in Europe and with rather less passion or result in the US will not be enough to see global emissions targets achieved. Neither will the efforts of big gas to introduce itself as the best and brightest answer to the task of powering the emerging world. No, the answer lies in science and finding ever-more-efficient ways of burning coal, ever-more-efficient ways of using the electricity it produces and, ultimately, the best possible ways of capturing the CO₂ it produces.
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