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Article in the AFR today.
Coal price going to be stable for some time.

Japan wants our coal, gas for decadesMichael SmithAFR correspondentTokyo | A top Japanese business leader and former head of Nippon Steel says Australian coal and gas will remain vital for Japan’s energy needs for decades, but fears the lack of new investment in fossil fuels threatens the country’s energy security.Akio Mimura, the chairman of the Japan Chamber of Commerce and Industry, who has overseen major investments in Australia, said it was vital that Japan maintained secure supplies of energy sources with Australia at a time when his country’s power needs looked increasingly fragile.‘‘Japan is in a fragile situation at the moment, and its trust-based relationship with Australia is very important,’’ Mr Mimura told The Australian Financial Review in Tokyo.‘‘It is very important to secure stable energy sources, and especially for Japan, which can only supply less than 5 per cent of its energy needs independently, especially when its nuclear power plants are still not in operation fully.’’His comments echo concerns within the Kishida government about potential disruption of Australian exports to Japan due to the global energy crisis.Mr Kishida is expected to seek a personal assurance from Prime Minister Anthony Albanese over reliability of gas exports to Japan when the two leaders meet in Perth tomorrow, amid concerns about energy nationalism in Australia.Mr Mimura remains honorary chairman of Nippon Steel, one of the world’s biggest steel makers and a key investor in Australia, where it owns stakes in six coal mines. Japanese conglomerates want assurances that their multibillion-dollar investments in the Australian resources sector will not be jeopardised by the political debate about domestic supply.Mr Mimura said balance was needed in investment decisions as the world decarbonised, and Japan was worried thermal coal would run out if investment continued to decline. He said Australian coal and LNG would play a critical role in Japan’s energy needs during the transition. About 65 per cent of Japan’s coal and 36 per cent of its LNG comes from Australia, government data shows.‘‘The energy transformation will not happen in a day. It requires a long time and various technological developments, which would ensure reasonable costs and energy consistency, and establishment of supply chain,’’ said Mr Mimura, who met with Trade Minister Don Farrell last week.‘‘Until then, we will need to depend on conventional energy sources. That is why both conventional and new energy sources are important.’’Mr Mimura said global economic challenges, including energy and food shortages, meant it was more important for Japan to deal with like-minded countries such as Australia to ensure a stable supply of affordable energy.He said capital investment in fossil fuel sources had halved. That had caused the current global energy crisis, which was not due solely to the war in Ukraine.‘‘Without continuous capital investment in facilities, the production capacity will be reduced. LNG is in a similar situation,’’ he said.Some Japanese companies are withdrawing from traditional fossil-fuel investments in Australia. LNG buying giant Tokyo Gas is considering offloading minority interests in four Australian projects, including Ichthys, to US private equity firm EIG. Japan’s Mitsui is also mulling the sale of its Queensland coal assets. Executives from Nippon Steel have reportedly said the company was prepared to make more investment in coal mines after the price of the commodity surged this year.While Mr Mimura would not comment on Nippon Steel’s management decisions, he said there was growing social pressure on companies to reduce investments in thermal coal. ‘‘There are situations now that NGOs come to shareholder meetings, or insurance companies refuse to insure thermal coal mines, or banks refuse to give loans to invest in thermal coal mines,’’ he said.It was crucial that Japan had backup energy sources during the transition to renewable energy. ‘‘Japan does not have any choice but to keep a certain percentage of coal in its energy composition,’’ he said.‘‘As the output level from renewable energy sources fractures, we have to have base power sources that can back up renewable energy sources, and compensate for the loss when the output by renewable energy drops.’’Business was also worried that thermal coal prices would increase dramatically as investment in the sector declined.Mr Mimura, who is stepping down as JCCI chairman after nine years in the role, said a key economic challenge facing Japan was the lack of growth.‘‘The issue for Japan, which was the same nine years ago, is that we don’t see economic growth in this county. No wage-salary increases, no commodity price increases, and no productivity increase. It is not only for the past nine years; the Japanese economy has been in this no-growth situation for two decades,’’ he said.Mr Mimura said geopolitical instability would open up more opportunities for co-operation between Australia and Japan.