Australia Coal

As of June 2005, Australia is estimated to contain 86.5 billion short tons (Bst) of recoverable coal reserves, the majority of which are concentrated along the country’s eastern seaboard. The Bowen Basin in Queensland contains the largest reserves (37.8 Bst). Reserves in the Sydney-Gunnedah Basin and surrounding areas of northern New South Wales (NSW) contain about 32.1 Bst. Minor reserves are also located in Southern and Western Australia as well as Tasmania.
Sector Organization

Australia has more than 100 privately owned coal mines located throughout the country. Around 60 of these mines are open cut operations, with the remainder being mined underground. As a result of several consolidations in recent years, Australia’s coal industry is dominated by four companies: BHP Billiton; Anglo American (UK); Rio Tinto (Australia-UK); and Xstrata (Switzerland).

Coal Production

Australia is the world’s fourth largest coal producer. In 2003, total Australian coal production was 373.4 million short tons (Mmst). Together, Queensland and NSW account for almost 97 percent of Australia’s annual coal production and 100 percent of Australia’s black coal exports. While both states produce both coking and thermal coal, production of coking coal is significantly higher in Queensland, while NSW leads in thermal coal production.

Over the last decade, coal production in Australia has grown by 4 percent annually, with new projects continuing to come online every year. In the first half of 2005, four new projects were completed in NSW and Queensland that will add an additional 11 Mmst to Australia’s annual coal output. In addition, there were 21 projects in advanced stages of development and 25 projects being considered.

Coal Exports

Australia exports approximately 60 percent of its annual coal production, making it the largest net exporter of coal (29 percent of global coal exports) in the world. Australia is dominant in the market for coking coal, where it is responsible for over half of all world exports. Australia also leads the world in thermal coal exports, accounting for 21 percent of that market. Australia’s thermal coal exports recently began to face new competition from China, raising the possibility that its share of that market may shrink in the future.

Japan is the destination for over 60 percent of Australia’s coal exports. Additionally, some analysts are expecting China to be a growing market for Australian coking coal in the next few years, as that county’s economy and need for raw materials both grow. Other important export markets include the rest of Asia and Europe. Australian suppliers set prices for their coal exports directly with Japanese utilities. The annually negotiated price of these contracts has a large effect on Australia’s coal export earnings. In April 2004, the Australian government announced that Japanese electricity producers could pay up to 70 percent more for Australian coal as a result of rising demand coupled with limited supply. Analysts are expecting close to record prices for Australian coal through 2007 at the least.