Carmichael in a position to buck the trend
PROFESSOR John Rolfe says the Carmichael Coal and Rail Project flies in the face of the latest industry report which paints a bleak picture for the mining sector.
The CQUniversity economics expert said Adani could progress the $16.5 billion project, which received final government approval this week, because it had a ready-made market.
It could well be a different story if the company was trying to sell on the open market.
"The Carmichael project is at odds with the current trends in coal prices but the difference is that Adani is an electricity power generator in India and they (India) are looking for very long-term security of their coal supplies.
"Adani are not quite as concerned about the current market price because they essentially have their own buyer for the coal.
"Adani are yet to make the final commitment to the project but if it goes ahead it would increase coal production in Queensland by about 24% and coal sector employment about 13% on 2013 levels."
Prof Rolfe's comments were prompted by the Mining Business Outlook Report, which says the mining sector has reached a new five-year low and confidence levels are likely to take years to recover.
Despite some optimism last year, the 2014 report found mining leaders were plagued by tough market conditions.
Prof Rolfe said it was clear from the report that industry leaders saw little scope for any new development now.
"There is nothing on the horizon to suggest that coal prices or world demand will go up quickly," he said. "There are still new mines coming online so the world supply of coal is trending upwards, which will keep the market fairly flat."
Prof Rolfe said coal prices had fallen about 40% in two years, and while the latest downturn was not the longest-lasting, it had been one of the most dramatic.
He was confident the market would return, given that coal was an essential commodity for power generation and steel making and the need for increased supplies into developing countries.
"Coal will pick up again but we just don't know how long the current cycle will last."
Do you think Carmichael Mine will go ahead?
This poll ended on 01 August 2014.
I have no doubts, I definitely think it will
I have my reservations, let's wait and see
This is not a scientific poll. The results reflect only the opinions of those who chose to participate.