Is coal on the way out? Many believe so. Many want it to be so.
Rio Tinto’s sale of coal assets has raised questions about whether the mining giant has concerns about the industry’s future.
It sold its Bengalla open-cut coal mine in the Hunter last September for US$606 million ($864 million).
On Wednesday, it announced the sale of its Mount Pleasant coal reserves in the Hunter for US$224 million ($320 million).
Coal has been a lower priority for Rio since a big fall in prices began in 2011.
The boom in coal was a long one. While some in the industry have played down recent price falls as cyclical, others are forecasting its doom.
Adam Lucas, a climate change researcher, said recently “the current coal woes are just the beginning”, adding that Australia’s failure to reassess its commitment to coal would have serious negative consequences for the economy as well as the health of millions of people and the global environment.
Mark Diesendorf, Associate Professor of Environmental Studies at University of NSW, said recently that: “Coal is on the way out”.
He added that: “The debate is how fast and what policies would speed up the transition”.
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The fact companies remain willing to pay big dollars for coal mines suggests the resource has quite a bit of life left in it.
A report from the International Energy Agency last year predicted south-east Asian demand for coal would triple in the coming 25 years.
The company that bought the Mount Pleasant project is linked to Indonesia’s Salim Group – a major conglomerate.
The Minerals Council of Australia said coal accounted for 80 per cent of electricity generation in NSW and 73 per cent in Queensland. It said it was easy to take for granted that coal kept households, industry, hospitals, trains, schools, shops and entertainment providers operational.
It added that coal would “remain the mainstay of our electricity generation”. “Reducing our reliance on coal would have negative consequences on the reliability and cost of supply.”
But as prices fall, jobs vanish and profits sink, as climate change forecasts worsen and as renewable energy sources become cheaper and more powerful, the pressure continues to grow on the industry and those who depend on it.