Plans to seek approval for a fourth coal loader in Newcastle have been delayed until late 2014 by the proponent Port Waratah Coal Services (PWCS), and may be “shelved” entirely, according to CEO Hennie Du Plooy.
Du Plooy was speaking at a coal mining conference in the Hunter Valley on April 8. The announcement comes in the midst of plateauing demand for thermal coal and a concerted community campaign against the project by the Coal Terminal Action Group and various other supporting groups in surrounding regions.
Boom and bust
The fourth coal loader, dreamed up at the height of Australia’s coal export boom (when demand for thermal coal was strong and prices were high), would have added another 120 million tonnes of export capacity to the world’s largest coal port. Exports this financial year are expected to total about 135 million tonnes, with around 85 per cent of this being thermal coal. Later stages of the third loader (currently under construction) will bring overall capacity to 210 million tonnes per annum. The port of Newcastle alone exports more thermal coal than world #3 exporter Russia.
Global growth in demand for thermal coal was expected to exponentially increase over the decade, driven primarily by what was portrayed as an unquenchable and virtually limitless demand from China and India in particular as they developed their economies. It is becoming evident that the demand from these two countries is nothing near what was anticipated.
Parallel to this, there has been a maturing and intensification of local campaigns against the coal expansion in Newcastle and the Hunter Valley. Rural campaign groups battling a swathe of new coal mines have linked up with urban campaigners concerned about the health impacts of existing coal movements and dismayed at the prospect of exports increasing to more than double current levels.
As in the Coal Seam Gas movement, unconventional alliances have been formed, with Horse Breeders, Wine Growers and farmers supporting local community groups, trade unionists and health experts in calling for the T4 project to be scrapped.
The announcement of the delays and possible shelving of the project were greeted with “celebration and relief” by community campaigners according to Coal Terminal Action Group spokeswoman Annika Dean. Ms Dean said that in suburbs including Mayfield, Tighes Hill and Carrington, residents were “already living with particle pollution well above the national standard” and said the announcement was “very welcome news for the 30,000 people who live within 500 metres of the coal corridor.”
The top three customers for thermal coal from the port of Newcastle are Japan, Taiwan and South Korea. Recent expansions were geared towards catering for new markets, primarily in China and India, whose traditional reliance on domestic coal production to feed their fleet of coal fired power plants was being tested as new plants proliferated. China has recently drawn on par with Taiwan with each purchasing a little over 10% of output from the port of Newcastle.
In the case of China, political pressure on the ruling Communist Party over smokestack pollution from coal has intersected with long term economic planning, which recognises renewables are an ascendant industry and coal is a sunset industry. Far from doubling its coal usage in coming decades like coal exporters had predicted, China says it will be capping coal usage by 2017.
The situation with India is less clear, but several factors militate against a rapid increase of imports of Australian steaming coal. If India were to move to importing large amounts of Australian coal for its fleet of power stations this would result in price rises to electricity that would be unaffordable for many electricity consumers.
Imported coal (even at today’s “low” prices of $90 per tonne) is vastly more expensive than domestically produced Indian coal. Coal fired power stations are extremely thirsty, requiring vast amounts of water for their cooling, and India is not known for its surplus water resources.
In both the case of China and India the same situation that is affecting other world markets looms large with regard to renewables. The cost of new wind is on par with new coal and getting cheaper; solar PV is reaching grid parity, and as these two technologies are deployed in ever larger amounts they will first dampen, and then utterly destroy demand for new coal before progressively displacing existing coal fired and nuclear plants.
Rio selling down
Du Plooy’s announcement about the extended delay to the T4 application came just days after reports emerged that Rio Tinto is looking to sell down a big slab of its stake in Hunter Valley mining consortium Coal and Allied. Coal and Allied is a joint venture between Rio Tinto (80% ownership), and Mitsubishi (20% ownership). Coal and Allied is in turn a 35% stakeholder in Port Waratah Coal Services as well a stakeholder in several Hunter Valley coal mines.
Rio has reportedly engaged Deutsche bank to sell its share in Coal and Allied down to 51%; it is rumoured that Coal India may be looking at purchasing the 29% of the entity that is for sale. Rio is selling down as part of a debt reduction drive and is therefore unlikely to shell out for their share in the $5billion T4 project anytime soon.
In the case of T4, simply sitting back and hoping that market forces might dispatch of T4 was not an option. PWCS has repeatedly indicated that even if it does not physically build the loader in the immediate future, it still wants an approval on the books. The intersection of vibrant local community campaigning and the shifting macro economic climate, which is taking the wind out of coal’s sails, is a phenomenon worth taking stock of.
Whilst market forces (themselves influenced by long term campaigns to move from coal to renewables) are only gently turning the tide against coal, what we are seeing is that this trend is helping expose chinks in the armour of what was previously seen as an almost unstoppable industry. Campaigns are becoming winnable, if campaigners are well organised.
The Coal Terminal Action Group (CTAG) brings together community members who are opposed to T4 for a range of reasons, the central concern being fine dust particle pollution from uncovered coal carriages and loaders. These same dust issues have been a focus for years now in the Hunter Valley itself, where the actual mines are located.
In Newcastle the group letterboxed 15,000 homes near the coal line and raised several thousand dollars from community members to hire dust monitoring equipment; in the meantime various groups throughout the Hunter Valley and in Mudgee, the Manning region, Gloucester, the Central Coast and Gunnedah basin have all been fighting local coal mine applications.
In early March CTAG released the findings of its ‘Coal Dust in our Suburbs’ report, and then just over a week later a rally was held in Newcastle with some 1500 people attending from Newcastle as well as throughout the Hunter Valley coal chain and beyond. This was a impressive turnout for a regional centre with only half a million people. Whilst the campaign has received a small amount of coverage in the national print and TV media, the local coverage has been substantial and ongoing and has meant that PWCS has been under growing pressure to justify the T4 project.
In announcing the delay and possible shelving of T4, PWCS’s Hennie Du Plooy noted that ‘‘There is no doubt the anti-coal lobby is making good on its commitment to specifically target T4 with the aim of stopping it to stop further expansion of the Hunter Valley coal industry’.
PWCS is on the run, and community opposition to T4 will continue. Dealing with the dust pollution from existing coal train and loader operations will remain a focus. Others campaigning against new mines and loaders elsewhere in Australia and internationally should take heart. If it can happen in the world’s biggest coal port it can happen in your area.
Just a day before the T4 delay was announced, community campaigns in Oregon in the USA were also successful in warding off one of five coal loaders proposed for the area. This followed sustained campaigns by Beyond Toxics and the Sierra Club against the Coos Bay proposal. The tide is turning and now is indeed a good time to think global, act local and get your local speculative coal expansion project delayed and then scuttled for good.
Zane Alcorn is a community organiser with the Hunter Community Environment Centre.
RenewEconomy Free Daily Newsletter