Is Australia’s New Coal Frontier in Trouble

There’s a new frontier in Australia that has been designated for coal mining by all of the major mining companies here in Australia along

with others from China and India. Perhaps you’ve heard of it … 

It’s known as the Galilee Basin and it’s located in a remote outback area in Queensland.

Record coal prices in recent years provided all the incentive necessary for Australian coal magnates to team up with Chinese and Indian companies to develop this major, untapped resource.

In fact, companies such as GVK Power and Infrastructure and Adani Enterprises established plans – with their Australian partners – to develop huge mines in Galilee for the obvious purpose of extracting the seemingly unlimited amounts of coal -- thermal coal.

It was a great plan, but global financial realities have “thrown a monkey wrench” into the works and resulted in delays. Here’s the problem …

Tumbling coal prices and tough, restrictive financing appear to be derailing the tens of billions of dollars of planned investment in Galilee Basin, a natural resource that, when finally exploited, will likely make Australia the world’s top exporter of thermal coal.

So … this delay is big news. And it is potentially harmful to Australia’s national economy. Yes … it can hurt.

Fortunately, the long term outlook for Galilee Basin is still very good.

While the two foreign companies noted above have stalled plans to develop five mines with the ability to produce more than 180 tons of thermal coal annually by the end of the current decade (that is double the current annual output in Australia), they believe that the global climate for coal will improve in the next 4-5 years.

That means the delay, while it is a problem in  the short term, will not have any lingering, long term effects. One negative of the slowdown in coal production is that it will keep Australia from surpassing Indonesia as the world’s number one exporter of thermal coal. But, again, that is only a short term problem.

When Chinese demand ramps up again – in the next few years – as expected, the Galilee Basin will attract all the major mining companies and Australia will quickly become the world’s top exporter of the precious raw material.

Bandanna Energy, one of the companies with an interest in developing Galilee Basin, issued a public statement recently stating that “the basin” is probably dead for now and, as such, the company was delaying its plans for developing several mines.

But, Michael Gray, Bandanna Energy’s Managing Director, also emphatically stated that Galilee Basin will definitely rise again – soon – when Chinese and global demand increases. In his informed opinion – the future for Australia and its Galilee Basin is bright – very bright.

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