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Queensland's politically sensitive Bowen and Surat coal regions could be among unexpected losers from the Coalition's push to give a $1 billion loan to Adani for a rail line, according to modelling by a coal industry consultancy.
The calculations show the negative impact on existing coal mines in southern and central Queensland from adding a fresh flood of subsidised supply to a global market in which demand has been steady for several years.
Analysis by Wood Mackenzie commissioned by investment group The Infrastructure Fund estimates the railway could unlock north Queensland mines capable of producing more than 200 million tonnes of coal per year.
That would be in addition to the 202 million tonnes of thermal coal exported from Australia last year.
"The impact of pushing such a large amount of new coal supply into a flat coal market would make Amazon's entry into Australian retail seem like nothing more than a blip," warns Jonathan van Rooyen, general manager of investment at The Infrastructure Fund.
Mr Van Rooyen has challenged Resources Minister Matthew Canavan, who has fiercely championed the Adani mine and railway line, to justify to southern Queensland coal miners why they are being asked to carry the burden of new jobs in the north.
A 150 million tonne rise in annual coal supplies into the world market would cut exports of coal from the Port of Newcastle, which TIFF owns, from by about 80 million tonnes to just under 150 million tones, Wood Mackenzie calculates.
In the Bowen Basin, west of Gladstone, export production would be around 50 per cent lower at around 38 million tonnes than under a scenario without the Galilee.
The nearby Surat Basin could suffer a hit of more than 10 million tonnes per year.
"In summary, figures we have provided represent the most likely response by the world coal market to the unlikely event of government policy pushing 150Mt of new coal from the Galilee into the world coal market, given our current view of global demand and the costs and capex of various projects," the Wood Mackenzie report states.
The report suggests that a number of mines would be displaced by the new entrants from the Galilee.
"While Minister Canavan has previously stated that he is unconcerned with the impact of North Queensland coal expansion on NSW coal miners, our modelling also makes clear that Queensland's Bowen and Surat Basins will also be hit hard by any flood of subsidised competition," Mr Van Rooyen says.
"Minister Canavan's billion dollar support for the Galilee coal basin is not just playing state against state, its mate against mate."
Read more: http://www.afr.com/news/special-reports/resources/adani-rail-subsidy-to-hurt-southern-queensland-mine-jobs-report-shows-20170705-gx52p3#ixzz4m1osjwnw
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This article first appeared on www.afr.com
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