Monday, 16 December 2013

Australia coal: an insecure investment

A new study from Oxford University, indicates that much of Australia's coal reserves will become stranded assets.
On the back of environmental concerns China is set to eventually move away from coal, leaving perhaps 2/3 of Australia's coal reserves untouched by 2050.
This comes after New Zealand's Solid Energy a state owned coal producer went belly up on the back of weak international coal prices and unrealistic dividend demands from the New Zealand government.
The new Oxford report calls in to question the wisdom of new mining expansions and coal port projects.
One project of particular environmental concern is a coal port expansion project off Abbott Point, Queensland set to make the port the largest in the world. Located near great Barrier Reef, this project has raised concerns that it will add even more pressure to an already under stress natural treasure.

Perhaps what we are seeing here is a desperate and delusional industry driving a credulous government ready to believe any business is good business. Well, Rio Tinto are not fooled. they're divesting over AU$3b from coal production.
The carbon bubble is coming, China is moving away from coal on the back of localised environmental concerns already. Coal fired energy production is causing acid rain in China and Japan while Shanghai plants turn the colour of the Tokyo sky. These are the most innocuous effects compared to the destabilization of the climate.
The carbon bubble offers perhaps the best business reason for divestment, a close second is perhaps the rapidly growing divestment movement of Universities, churches and cities around the world are making the choice to divest from extractive carbon industries. So to add to weak demand for coal and other extracted carbon, the extractive industry is going to find financing a tougher market in which to raise capital investment funds.

See also
   Sydney Morning Herald
   Carbon Tracker
   The Gardian GBR under threat from coal port expansion

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