PERTH (miningweekly.com) – Mining was set to remain one of the future building blocks of the Australian economy, advisory firm Deloitte said on Monday, following the release of its ‘Positioning for Prosperity? Catching The Next Wave’ report.
Deloitte national mining leader for the East Coast Reuben Saayman said that mining remained a “genuine growth wave” for Australia.
“It presently represents about 10% of our economy and, as long as we address cost challenges, we have a lot of runway left.
“But we know as a nation that we can’t just rely on mining. We need new growth drivers that also capitalise on our advantages that include world-class resources and proximity to the world’s fastest growing markets in Asia.”
The report noted that in addition to mining and the “fantastic five” of gas, tourism, agribusiness, international education and wealth management, a further 19 future wave growth areas would also assist in building the economy, including clean coal.
“Australia has huge coal reserves, and according to the International Energy Agency’s world energy outlook for 2013, by 2035, fossil fuels will still represent around 75% of the global energy mix, compared to the approximately 82% today,” Saayman said.
“But the world’s desire for clean air will throw a curveball into our ability to earn as much in the future from the likes of thermal coal as we have in recent years.”
Saayman pointed out that the Bureau of Resource and Energy Economics had previously reported that Australian thermal coal exports would be worth more than A$20-billion a year by 2017/18.
“This is clearly a lot of money – and national income we don’t want to risk,” he added.
“Luckily, there is a lot we can do about question marks over the longer term potential for Australian thermal coal, ranging from tax and regulatory action by governments to the pursuit of operational excellence by individual miners.
“Their focus has been on production rather than cost, but costs now need to be sustainably addressed through, for example, innovation.”
Deloitte reported that the 250-million tonnes of thermal coal that Australia would export to earn that A$20-billion a year – double what it was ahead of the global financial crisis – would play a key role in powering the world’s electricity generators.
“But its role is under threat. Global gas reserves, including Australia’s, are one cleaner alternative.
“So, driving down the cost of the technologies and processes involved in burning coal more cleanly has the potential to reinvigorate growth prospects for coal exports and deliver us another future wave of economic opportunity,” Saayman said.
He added that there were major economic and technical challenges to clean coal, but the future payoff to Australia from a reinvigoration of prospects for its vast thermal coal reserves would be massive.
“That alone ensures coal retains the potential to be a standout growth sector and that Australian businesses should, therefore, be closely monitoring developments in clean coal technologies and costs.”