A senior geotechnical engineer specialising in coal extraction said Australia is currently experiencing its biggest coal boom in over a decade due in part to the pausing of trade with China.

As the world continues to rely on the country’s coal economy, Tom Lynch of Cartledge Mining and Geotechnics (CM&G) said the future is looking bright for Australia and believed we could see significant increases in the quantities of thermal and coking coal production over the next decade.

“Determining the future of coal is an exciting prospect. When we look back, in 2020 the value of coal exports from Australia weighed in at nearly 55 billion dollars and while that’s down more than 10 billion this year, the forecast for the remainder of 2021 and 2022 is looking incredibly strong.

“The drop during the year of covid was unsurprising owing to the ceasing of Chinese support in buying our exports, but what’s come from that downturn has been a subsequent shift in the way Australia now looks to other buyers,” Lynch said.

As China moved to purchase coal from other countries, this resulted in a change where international producers began selling to China at a premium, and Australia began selling to their original clients.

“The global network didn’t change. While China was negotiating to buy from other suppliers and mines, their clients were left looking for new coal sources, and Australia was the obvious choice.

“This is partially why we’re seeing record coal prices. We’re in the midst of the truest boom we’ve had in 13 years, and even though the commodity price will likely return to more sustainable levels, I can’t see the resurgence in coal slowing down,” Lynch said.

In the wake of China pausing trade with industry, Australia has inadvertently placed itself in a globally enviable position to form new market alliances with international supplier networks.

“The worldwide market has never been more accessible to us. We’ve been introduced to a much more diverse and robust client base. We’re seeing a significant increase in the last six months in terms of demand from Europe and Africa, and in April, India significantly increased its coal imports from Australia.

“Having access to a global counterpart network has never been more needed than now. We can learn about foreign mining conditions, understand the end-consumer better and share resources. All of this will contribute to our sectors’ education and growth.

“According to the International Energy Agency, in 2018 coal generation accounted for 38 per cent of the global electricity supply and although electricity demand reduced in 2020 due to COVID-19 impacts, the demand for reliable base-load power is rebounding as global economies stabilise and people get back to work,” Lynch said.

Over this last decade, our domestic supply of power generation has shifted away from brown coal and gas to renewables; however, black coal has remained steady at approximately 50 per cent of Australia’s base-load electricity supply.

One of the reasons why thermal coal usage remains so strong is its high purity, low sulphur, and low ash properties. This means that its energy density is very high relative to coal produced in other countries.

“When we look back to Christmas 2020, many mining companies were citing downturns in their revenue directions. It was a daily discourse amongst staff meetings, with many mines predicting the downturn to continue well in 2021.

“However, for the next few years at least, things are looking really good for the industry. The world’s energy sector continues to operate with the support of thermal coal, and until base-load power supply alternatives are financially competitive in the renewables and energy storage space, thermal-coal will continue to be the primary source of global electricity generation.

“Similarly for coking coal, there is no viable alternative for steel manufacture than to use coal.  Several universities are researching alternative methods of eliminating impurities and oxygen from iron ore and introducing carbon to the smelted iron to make steel. Still, these technologies are currently not commercially attractive.  With that, for the foreseeable future, coal remains the only viable method to produce steel,” Lynch said.

“As we develop more Australian sites, the geography and circumstances in which we mine change too. We know we’re going deeper and deeper underground, and the size of the sites is increasing too. The amount of coal needed to be produced to meet the needs of new and hungry markets is creating a promising and complex landscape,” Lynch said.

The geotechnical engineer stressed the importance of developing optimised designs demonstrating a mine’s lifecycle before any unearthing work would begin.

“Environmental legislation is becoming more robust and stringent, and rightly so, and it is critical that boards invest early in scoping designs that allow for maximum extraction potential, safety and geotechnical considerations, and in preserving the land for post-mine closure.

“Regulators now require mines to develop their Life of Mine plans, which show the area to be mined and the final landform post-closure,” he said. “Beyond this, investors should be asking for geotechnical studies that demonstrate that the mine plan is obtainable with respect to rock mass properties, geological structures, and volcanic intrusions before making any financial commitments; they should be able to see and understand with perfect clarity, what the final landform will look like and how the company intend to mine through geotechnical hazards before any work is carried out.

“If you don’t walk away with geotechnical confidence, don’t pay,” Lynch said.

With robust mining regulations and a stable economy, coal consumers can be more confident in Australia’s advanced supply chain network and low Sovern risk.

The number of mines turning to CM&G for advice and support on revising their design to capture more coal increased during the last six months, and while an encouraging sign for the sector, Lynch said that all future sites should be scoping feasibility modelling in advance for best practice and financial reward.