India looking elsewhere for its coal a worry
INDIA sent a tremor through the Queensland economy yesterday when the Governmentowned Steel Authority of India Ltd said it was in talks with Canada in a bid to diversify supply away from Australia.
The decision followed the crippling of coking coal supplies after Cyclone Debbie shut down Aurizon’s rail networks in Queensland, particularly the crucial Goonyella line from Blackwater, which supplies about half of the state’s coking coal exports.
About 22 per cent of all Queensland coking coal exports, worth about $4.6 billion, went to India in 2016, making it the second largest importer of coal, in tonnes, after China.
SAIL said it had entered talks with Teck Resources for a coal supply agreement, potentially scaling back on the coal it sources from BHP, which supplies about 75 per cent of its demand. India is forecast to import over 50Mt of metallurgical coal in 2017.
India makes up about 15 per cent of BHP’s coal sales.
When steel mills diversified away from Queensland after the 2011 floods and bought coal from the US, it took years to regain that market share.
McCullough Robertson strategic adviser Michael Roche said SAIL’s decision was not unusual and would not mean it was able to source its coal more cheaply because the supply disruptions from floods and cyclones in Queensland lifted the price for everyone. Mr Roche said supply was a “top-of-mind” issue for SAIL.
He said forecasts still had Queensland as the dominant supplier of seaborne coking coal to 2040.
“It’s a reminder our customers will look for options and we need to learn the lessons from the Cyclone Debbie supply disruptions,’’ Mr Roche said.