According to some reports there is reason to believe the coal mining industry in the Bowen Basin area is on a decline. However, recent activity is sure to build confidence in the Central Highlands and attract investors back into the market.
Despite falling prices in 2014, BHP, who is Central Queensland's largest coal miner, remains optimistic about the mining business for the future, not to mention mining giants Adani securing their new agreement with the Queensland Government in February. According to BHP, several components will result in an approximate cost reduction of 15 per cent in the Bowen Basin area which will make a noticeable difference to the performance of the mines. These include the falling of the Australian dollar, decreased shipping rates and per unit cost reductions. In addition, the cost per tonne of coal has dropped $15 per tonne from 12 months ago.
Not only will the lower costing better the industry, but the demand for our coal is set to be increasing in the mid to near future, with BHP's coking coal production expecting to reach approximately 47 million tonnes at the end of this financial year.
BHP stated, "Metallurgical coal pricing is expected to remain stable as Australian supply growth slows and North American supply declines. China's scarcity of high quality metallurgical coal will underpin long-term demand as China's pig iron production peak in 2020."
Although 31 per cent down from a year ago in profits, BHP exceeded expectations with the first half of this financial year resulting in $5.35 million, equating to an 11 per cent return on investment.
Equally optimistic, Adani has recently committed to an onshore dredge disposal option at Abbott Point, along with building significant rail and mine infrastructure in the Galilee Basin region ensuring 10,000 jobs and $22 billion in taxes and royalties. Adani has proven through consistency their willingness to work with both sides of the Australian Government to deliver jobs and infrastructure in Queensland.
The expansion of the port at Abbott Point is welcomed by Adani CEO and Country Head, Jeyakumar Janakaraj, who said, "I welcome today's announcement because it demonstrates the priority the government has placed from the outset on ensuring ecenomic development proceeds in Queensland subject to robust environmental standards."
It could be agreed that with closely scrutinised environmental factors in mind, the implementation of expanding our ports is vital for the Queensland economy. The $22 billion in royalties generated from the first half of the project alone will assist with funding for schools, hospitals, roads and other services, stimulating the Queensland economy.
References: shiftminer.com; adaniaustralia.com.au