Rail operator Aurizon is expecting Australian coal exports to grow over the next decade at a rate of about 1 per cent per annum despite difficulties with China.
Steel-intensive growth in India and prolonged coal-fired generation driven by relatively new power stations in Asia were expected to support that growth.
The outlook came in Aurizon’s half-year financial reporting, which showed the hit that coal has taken recently.
The amount of coal shifted on Aurizon’s Central Queensland Coal Network dropped by 4 per cent in the last half of 2020 to 71.2 million tonnes.
COVID-19 and a challenging trading environment with China, along with customer specific maintenance and production issues, caused the drop.
But the rail operator reported flat EBIT for the half year at $454.2 million, with higher earnings in its bulk business and network offseting the drop in coal.
In the results presentation, Aurizon managing director and chief executive officer Andrew Harding said global steel production had returned to pre-COVID levels, including record crude steel production in China for 2020 (1.05 billion tonnes).
Australia’s total coal export volume to China was down by 18mt (-79 per cent) in the December quarter, with 53 vessels holding Australian
coal remaining off the coast of China.
While alternative export destinations had been found, this had not completely offset the negative impact, with 10mt being redirected to markets outside China, he said.
Australia exported 86mt of metallurgical coal in the last six months of 2020, down 6 per cent against the prior year.
The average hard coking coal price fell by 26 per cent (compared to the prior year) to $US112/t.
Australia exported 97mt of thermal coal in the last six months of 2020, down 12 per cent against the prior year. The average Newcastle benchmark thermal coal price fell by 13 per cent (compared to the prior year) to $US59/t.