The coal industry has just been dealt a major blow: Swiss commodity giant Glencore is shutting down all of its coalmines in Australia over Christmas. Employees will be forced to take three weeks of compulsory leave due to dropping demand for coal. Barbara Barkhausen reports from Sydney.
It’s bad news for Australia’s commodity-driven economy: The world is losing interest in coal, even seemingly energy-hungry Asia. But hardly anyone in Australia wants to pay attention to the writing on the wall, least of all Prime Minister Tony Abbott who just a few weeks ago boldly announced that: “Coal is good for humanity”.
Coal prices are dropping
Swiss commodity trading and mining company Glencore seems to be aware of the looming storm. Australian media reported last Friday that the multinational will close all 13 of its mines in the states of New South Wales and Queensland over Christmas as a total 8,600 employees will be forced to take three weeks of compulsory leave. The result: around 5 million tonnes of coal won’t be extracted.
Glencore said that the reason behind this unprecedented move is the oversupply of coal on the world markets, which has already weakened once-strong prices. Thermal coal, which is mainly used for power and heat generation, is now trading at around USD 65 per tonne, nearly half of what it was traded for three years ago when it stood at USD 120. Experts predict that the demand for coal on the world markets could remain weak for years to come.
Asia wants to wean itself off coal
International climate policy, which was in a deep slumber for a long time, is finally starting to wake up. Last week, the United States and China – the two biggest emitters in the world – agreed to limit and reduce greenhouse gas emissions. China has already been working towards reducing its coal consumption in order to improve the country’s poor air quality. Instead of importing around 49 million tonnes of coal from Australia, China is now set to import only half that amount, reports the Sydney Morning Herald.
And Beijing is in good company: India’s Energy Minister also announced last week that his country will stop importing thermal coal over the coming two to three years.
Australia turns its back on the climate
The more countries that agree to climate targets, the more has to be invested in alternative sources of energy instead of fossil fuels. Australia, on the other hand, scaled back its renewable energy investments by 70 per cent in 2014, according to the country’s Climate Council. The independent, non-profit organisation funded by donations by the public has criticised Australia of becoming a model for laggards.
For good reason, too: In July, the conservative government repealed the CO2 tax, which had been introduced two years earlier as a pricing mechanism by the then social democratic government. The current government has no plans to put in place a modified CO2 tax.
Focus on economic growth
Australia is now one of the world’s largest carbon dioxide emitters and is an even worse polluter than China on a per capita basis. And yet the Australian government – especially Prime Minister Tony Abbott – continue to refuse to think about climate change.
At the G20 summit held in Brisbane last Saturday and Sunday, Abbott had insisted that economic issues such as jobs and economic growth should be front and centre on the summit’s agenda, not “what might happen in 16 years’ time”, when referring to climate change. With such an attitude, Australia is quickly becoming an outsider on the world’s stage and will soon find itself alone as other countries break free of its coal once and for all.