Monday, December 19, 2011

Galilee coal & Australia's mega developments

I was fascinated by a short report in the Australian (Paul Cleary, 16 December 2011) on Clive Palmer's China First coal development in Queensland's Galilee Basin. You will find another story by David Wroe (SMH, 19 December) here.

Before going on, this map shows the distribution of the Queensland coal fields. The Galilee Basin is marked by the light brown on the left. The China First Coal project itself is about 400 k inland from Gladstone.   

The scale of these developments is enormous.  In this case, the project will apparently:

  • cost $A7.5 - 8.8 billion (estimates vary)
  • generate 6,000 jobs during the construction phase, 1,500 during operation
  • boost coal exports by 40 million tonnes per annum worth approximately $A4.6 billion dollars
  • occupy some 55,000 hectares.

Unusually, the First China impact statement includes modelling suggesting that will cause a "considerable decline" in manufacturing because the extra coal exports from July 2013 will put upward pressure on the exchange rate.

Modelling produced by the consultancy AEC group says the project will cause the loss of 2215 manufacturing jobs in Queensland alone between 2013 and June 2018, and a further 1666 jobs over the next 18 years, with some job losses elsewhere in Australia as well.  Agriculture will also lose about 450 jobs.

At the same time, and this is not referred to in the newspaper reports that I have seen, the project will create its own jobs beyond the direct employment numbers.  

This is actually about what you would expect during a process of fundamental structural change since this means basic shifts in economic activities. The recent Australian Bureau of Statistics National accounts figures contained some remarkable statistics showing the scale of the changes now underway. The following table shows the increase in state final demand seasonally adjusted over the last twelve months ranked by the percentage size of the increase.


State, Territory % increase final demand year ending Sep 11
Western Australia 16.4
Queensland 9.3
Victoria 1.8
ACT 1.3
NSW 1.2
Tasmania 1.0
South Australia 0.1
Northern Territory 0.1

The numbers bounce around, with part of the Queensland increase due to recovery from the floods. Even so, you can see what I mean. That WA number must be one of the highest growth rates in the world.

Meantime, Greenpeace is worried that the development of mega coal mines in Central Queensland will destroy the world's chances of keeping global warming to 2 degrees. According to newspaper reports, calculations made by the Institute for Sustainable Futures at the University of Technology, Sydney, on behalf of Greenpeace conclude if the proposed mega-mines in the Galilee Basin run at full pace, by 2035 they would be eating up 4 per cent of the world's carbon budget and 9 per cent of the emissions set aside for coal.

The weakness in the Greenpeace analysis lies simply in the assumption that if the Galilee mines do not proceed, things will be different. If the demand for coal is there, production will expand. Remove Central Queensland, and other mines will expand in their place. 

No comments: