NORTH VITAL AREA FOR CHINA
WHITEHAVEN Coal says it is on track to deliver “a record set of financials” this year as thermal coal prices hover at seven- year highs, thanks to strong demand, particularly from China and India.
Chief executive Paul Flynn said record production at Whitehaven’s Maules Creek mine in the fourth quarter, and ongoing strong performance at its Gunnedah mine, helped the group hit sales within the guidance range.
Whitehaven said global demand for thermal coal in the first half of 2018 remained strong following a 2 per cent increase last year. “The appetite for high quality coal in the Asian region continues to grow, with India and China leading demand,” the group said in its fourth- quarter production report yesterday.
Commenting on the market outlook, Whitehaven said Chinese power demand had increased 8.5 per cent in the first five months of 2018, with coal- fired generation up 6 per cent over the same period, thanks in part to a cold winter. CHINESE investors will continue to buy into Queensland’s resources sector but greater due diligence will be applied to try and improve their returns, a forum has been told.
Queensland state manager of Bank of China Audrey Xiaohong Zheng told the JCU Asian Market Forum in Townsville on Friday that Queensland remained a key investment market despite the challenges of investing in Australia.
“I think coal, oil and gas will continue to be one of the investment hot spots but ( there will be) more adjustment in policies,” Ms Zheng said.
“Investment in this area will go through more thorough due diligence … to make them more profitable for the investment.”
She told the forum investment into Queensland had slowed as the mining boom deflated in 2013, comprising around 20 per cent of the $ 4.9 billion of direct investment into Australia in 2016.
Australia ranked fifth behind Hong Kong, the United States, the Cayman Island and British Virgin Islands as a direct investment destination and sixth in stock investment.
Ms Zheng said Australia was a relatively expensive market with frequent project delays, causing cost overruns, along with expensive labour costs and working visa restrictions.
She said applying the petroleum resource rent tax to on- land projects in 2012, after some investment decisions had been made into gas, amounted to a 40 per cent levy on profits.
These kind of changes provided “great challenges” for investors, she said.
But she said Queensland held natural advantages for investment.
“In the future there will be growing demands from China to meet the requirements for healthier food, for new technology and for medical care and health care,” Ms Zheng said.
Other sectors likely to attract investment were for solar and wind projects, aged care, health care, tourism and education.
“We see a lot of Chinese students studying here and that number will not decrease,” Ms Zheng said.
“I’m very confident. Even though there are lots of challenges, I think the people from both countries are trying very hard to make these challenges less and less, to better the investment environment and improve co- operation in trade and investment.
“Through this very good communication platform, I think transactions in trade and investment definitely will go up.”