Green shoots, burning issues

Transcription

1 Green shoots, burning issues Australian Institute of Mining and Metallurgy, Southern Queensland Branch 30 April 2015 Michael Roche Chief Executive, QRC

2 CONTENTS 1 QRC 2 Queensland 3 Green 4 introduction resources shoots sector context Burning issues

3 WHO IS THE QUEENSLAND RESOURCES COUNCIL? QRC is a not-for-profit peak industry association representing the commercial developers of Queensland s minerals and energy resources 78 full members explorers, miners, mineral processors, site contractors, oil and gas producers, electricity generators 193 service and associate members the providers of goods or services to the sector A multi-commodity, state-based advocacy body formed in 2003 as successor to the Queensland Mining Council (itself a merger of coal, metals and gas producers)

4 Aberdare Collieries Adani Mining Allegiance Coal Altona Mining Anglo American Aquila Resources Areva Resources Australia Arrow Energy Bandanna Energy Beach Energy Bengal Coal BHP Billiton Cannington BHP Billiton Mitsubishi Alliance Caledon Resources Cape Flattery Silica Mines Carabella Resources Carbine Resources Carbon Energy Carpentaria Gold Civil Mining and Construction Coalbank Cockatoo Coal ConocoPhillips Australia Downer EDI Mining Ensham Resources ERM Power Evolution Mining Exco Resources Glencore Coal Glencore Copper Glencore Zinc Guildford Coal GVK International Coal Investigator Resources Isaac Plains Coal Management Jellinbah Resources John Holland Kalimati Coal Company Laramide Resources Linc Energy Lucas Group Macmahon Holdings Mastermyne Metallica Minerals Metro Mining Millmerran Power Mgt Minerals and Metals Group Mitsubishi Development Mitsui Coal Holdings Moreton Resources New Hope Group Norton Gold Fields Origin Energy Paladin Energy Peabody Energy QCoal QER QGC Queensland Coal Investments Rio Tinto Alcan Rio Tinto Coal Australia Rockland Resources Santos/TOGA Senex Energy Shell Australia Sibelco Australia Sojitz Coal Mining Stanmore Coal Summit Resources Thiess U & D Mining Industry (Aust) Vale Valiant Resources Wesfarmers Resources Westside Corporation Whitehaven Coal Yancoal Australia 78 full members big and small 158 service members 35 associate members

5 We built THIS city on rock and COAL #BrisbaneHiViz

6 QUEENSLAND RESOURCES TODAY > Queensland #1 source of traded coking coal > Lead #2 in the world > Zinc #3 in world > Silver #6 in the world > Bauxite #6 in the world > Copper #12 in the world (#1 in Australia) > Australia (with Qld CSG) world s #2 gas exporter; potential #1 by 2020

7 2014 VALUE OF PRODUCTION: $AU34 BILLION BLACK THERMAL COAL $US4.9 BN BLACK PRIME COKING COAL $US16 BN COPPER $US2.5 BN CSG $1.1 BN GOLD $US1.4 BN LEAD $US1.3 BN SILVER $US0.9 BN ZINC $US2.2 BN ALUMINA $1.8 BN ALUMINIUM $1.2 BN BAUXITE $0.8 BN Source: BREE, IHS McCloskey

8 Green shoot #1: All Qld LNG plants exporting in % of incremental gas demand from Asia QCLNG (2014) 8.5 MTPA (BG Group, CNOOC) * BG Group target of $AU94 billion takeover bid by Shell GLNG (2015) 7.8 MTPA (Santos, Petronas, Total, Kogas) Queensland LNG helping Australia to #1 LNG exporting nation by 2020 APLNG (2015) 9.0 MTPA (Origin Energy, ConocoPhillips, Sinopec)

9 Green shoot #2: Bowen Basin poised to rebound

10 Green shoot #3: Surat Basin vote of confidence

11 Green shoot #4: Galilee Basin potential

12 Coal prices long journey south (since 2011) Slowing of growth in China and continued poor economic performance in Europe that impacts steel production and therefore coking coal demand. Coking coal prices flat-lining. Continued oversupply of thermal coal in the seaborne market but recent trends see some uptick in spot prices. 12

13 Record coal exports replacing price with volume QUEENSLAND COAL EXPORTS (Mt)

14 Industry needs cost structure to withstand the cycle We are struggling to survive and the current structure of the fixed costs on our industry i.e. take-or-pay on rail, port, power, water, accommodation etc. makes it very difficult to make a decision around 'survival' strategies. Moving from construction to operations phase it is imperative that we ensure the cost base of the business allows for a positive economic outcome.

15 BUSINESS ENVIRONMENT CEO SENTIMENT QRC asks members: To what degree will these macroeconomic factors adversely impact upon the objectives of your organisation over the next 12 months? 15

16 Queensland coal trade facts: 2014 World Energy Outlook* > Australia (Queensland) to remain leading exporter of coking coal (60% share) > Coking coal trade grows to 40% of global production > Queensland has coking coal inventory of 11 billion tonnes (4 billion suited to open-cut) > Large suite of potential projects of high-quality coking > Coal preferred fuel for power generation in Asia due to availability, economics > India s import demand to lift from 126MT (2013) to 429MT (2040) > Major India interest in new Queensland thermal coal province, the Galilee Basin > Chinese coal imports expected to level off by 2025, but above current levels > Coal imports in other Asia (e.g. Malaysia, Thailand, Vietnam, Philippines) trebles by 2040 > Before 2030 Australia regains position from Indonesia as leading coal exporter * International Energy Agency Nov 2014

17 LONG TERM OUTLOOK Global coal demand by key region Inputs to power in China Source: BP Statistical Review, Feb 2015

18 Global demand fundamentals electricity

19 Global demand fundamentals steel marker

20 Metals toughing it out with some bright spots > Moderate copper recovery forecast with lower dollar and stockpiles > Zinc well poised, ironically with closure of Century Zinc Mine, Qld > Aluminium (and pre-cursors bauxite/alumina) expected to be among stronger performers > Silver in holding pattern dictated by gold price > Lead outlook neutral > Uranium: world class deposits whose time will come if policy allows Queensland s global competitiveness central to planning and outlook, but other major challenges beckon

21 WORKING ALONGSIDE THE GREAT BARRIER REEF > Great Barrier Reef a global icon same size as Italy or Japan > Reef export gateway for global minerals and energy provinces > Exports (resources, rural, tourism) via 11 Reef trading ports valued at $AU40 billion (2012) > Resources sector goal sustainable development in a World Heritage site > Australia at forefront of environmental management

22 Naturally occurring Hardy Reef in the Whitsunday Group. Photographed by Australian Geographic and misrepresented on Facebook as the start of dredging on the Great Barrier Reef, four days before the Abbott Government was elected to government in Australia.

23 ACTIVISTS UNITED AGAINST COAL AND GAS The coal port at Abbot Point is next to the World Heritage listed Great Barrier Reef Marine Park. Build a powerful narrative about the global importance of the Galilee Basin and use this to build a high profile public campaign, putting issue in national and international spotlight. Disrupt and delay key projects and infrastructure while gradually eroding public and political support for the industry We need to change the story of coal. This means challenging the economics of coal 23

24 ACTIVISTS GOAL TO CLOSE COAL/GAS PORTS Australian Institute of Marine Science 27-year longitudinal study October 2012

25 REEF 2050 PLAN: ABBOT POINT EXPANSION > Queensland Government has restarted approvals process with dredging referral to Commonwealth > Expansion dredge spoil to be diverted to non-sensitive port industrial land outside WHA As long as it s not coal: That still means recklessly ripping up seabed and sending more coal ships through the Reef. Greenpeace Australia-Pacific The Queensland Government has withdrawn plans to dump dredge spoil in the Caley Valley wetlands! The wetlands act as a natural filter for the Great Barrier Reef. The fight's not over yet, with the mining industry still pushing for the port expansion. Australian Marine Conservation Society While we welcome that the dredge spoil will not be dumped in the reef s waters or wetlands, the dredging, shipping and climate impacts of building the world s largest coal port in this World Heritage Area remain. (Queensland) Greens Senator Larissa Waters

26 Mtpa INDUSTRY AGENDA: PROMOTE ACCURATE DATA Queensland coal exports (capacity): actual and trend growth vs Greenpeace estimates CAGR 19% CAGR 6% CAGR 5.4% Year Actual Greenpeace Trend Source: BREE, QRC estimates, Greenpeace 'Boom Goes the Reef'

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28 1.3 billion people without electricity 2.7 billion choking on household fumes every day

29 UN PRIORITIES: ENERGY POVERTY AND CLIMATE CHANGE Renewables still to deliver reliability and scale to lift billions out of poverty Electricity demand dictates we must deploy more of what we have coal, gas, uranium, renewables and faster roll-out of low emission technologies According to WHO, 4.3 million people a year die from the exposure to household air pollution from solid fuels

30 QRC standing up for members

31 Green shoots, burning issues Australian Institute of Mining and Metallurgy, Southern Queensland Branch 30 April 2015 Michael Roche Chief Executive, QRC