IHS Markit, March 05, 2021
Representatives from the public and private sectors in China, India, and Indonesia emphasized at CERAWeek by IHS Markit that coal has the longevity to maintain a steady presence in regional industries like power generation and steel for decades to come.
That remains true, they said in panel discussion on 5 March, even as many of the world’s advancing and emerging economies pledge to reach net-zero carbon emissions.
Two factors — national policies, and coal’s regional market fundamentals — will continue to shape the commodity’s presence and trade in Asia, said Yaokun Gao, a Beijing-based managing director at Coeclerici Far East.
Gao pointed to the ongoing trade dispute between China and Australia as a game-changer for Asian coal. China was a major destination for Australian thermal and
metallurgical coal exports, with shipments effectively banned to the world’s largest steelmaker.
“For the short term, I’m pessimistic,” on the chances of a quick resolution of the China-Australia dispute, Gao said. Progress should not be expected before the end of 2021, he added.
Longer term, “I believe world leaders will be wise enough to find a solution” to the trade tensions, Gao said. The politics of coal and its place in other Asian trade sectors have added a further wrinkle to regional cooperation. “Politics’ influence on the [coal] trade is unpredictable,” Gao said. “For participants, it’s getting more and more difficult to forecast the market, to base budgets on fundamentals,” Gao said, because the policies are not fundamentals-based.
Self-sufficiency in India
India, for its part, has to balance the policy goals of aggressively decarbonizing its economy and, in its coal sector, becoming a self-sufficient producer. The country aims to produce all of its coal supply needs by 2024.
P.M. Prasad, chairman and managing director at Central Coalfields, a division of state-owned Coal India, expressed optimism about these and other targets. Following the economic upheaval in 2020 as a result of the COVID-19 pandemic, 2021 should be a “normal year” that will bring a return to coal production growth, Prasad said.
Coal India is on track to produce 1 billion metric tons (mt) in 2024, Prasad said, a company objective. That level is up from about 730 million mt targeted by the company for this year.
Coal from Indonesia can help smooth out market disruptions from trade disputes, said Hendra Sinadia, the executive director of the Indonesia Coal Mining Association, a trade group. Some 97% of the country’s coal exports serve the Indian and Asia-Pacific markets, he said.
Yet Sinadia acknowledged that regional coal demand faces uncertainty, given the recent announcements of large Asian economies — including China, Japan, and South Korea — about achieving net-zero emissions by the middle of the century.
When asked about the place of stronger environmental standards in Asian coal, Sinadia called them a “compulsory” part of future planning by governments and companies.
Sinadia called for “market diplomacy” in helping manage stakes and stakeholders in Asia’s coal arena. “We see market diplomacy as not only the role of the governments, but also of producers and associations,” he said. “We need to take a proactive role.”
Coal producers and customers can likewise do more to decarbonize, such as investing in regional coal gasification, Sinadia said. Adjustments like these would ensure a place for coal in Asian economies’ needs longer into the future, he said.
And the energy transition may yield future opportunities for Asia’s coal sector that are only beginning to emerge. When asked about China’s launch of a national emissions trading scheme in January, Gao said that, given the right incentives, companies like Coeclerici would “seriously consider” participating in the market.