Yancoal’s recently acquired Hunter Valley Operations project. Image: Yancoal.
BY CAMERON DRUMMOND
MANY Hunter Valley communities are intrinsically linked – historically and economically – to a mining industry which currently injects about $6bn in wages and payments to local businesses each year. Now, as coal prices receiver and stabilise, the Hunter’s economy is set for a welcome boost.
With a 2016 population of 732,000, the Hunter Valley accounts for 28 per cent of NSW’s inhabitants outside Sydney.
Since the early 1800s, the Hunter’s mining operations have been a stalwart of economic activity in the region.
The Hunter is no stranger to coal price cycles. Having just navigated the post-global financial crisis depression, it is looking toward a brighter future as increased demand from Asian markets propels greater output from mines throughout the region.
Hunter Valley Coal Chain
The Hunter Valley Coal Chain provides about one-fifth of Australia’s thermal and coking coal from 35 coal mines owned by 11 coal producers, under the auspices of the Hunter Valley Coal Chain Coordinator (HVCCC).
Mines near the eastern edge of the basin are spread along the Hunter Valley from Newcastle in the south, to Muswellbrook in the north; with mining further at Yarrawonga near Gunnedah.
Mines such as Ulan and Springvale in the Western Coalfield and Mandalong and Westside in the Newcastle Coalfield produce mainly thermal coal.
In the Hunter Valley coalfields, both soft coking and thermal coal products are produced from mines such as Hunter Valley Operations and Bulga.
The HVCCC was a concept created in 2003 to streamline production through a centralised planning model for the production, transport and export of coal from these sub-regions.
Coal is delivered from mines through four main rail haulage providers; Pacific National, Aurizon, Glencore and Southern Shorthaul Railroad.
Collectively, they make more than 20,000 trips from more than 31 different loading points to the Port of Newcastle, the world’s largest coal export operation, from distances of up to 380km away.
Product is then loaded onto more than 1400 coal vessels each year via three terminals controlled by Port Waratah Coal Services (PWCS) and Newcastle Coal Infrastructure Group’s (NCIG).
PWCS is the largest terminal, facilitating about 70 per cent of throughput at Newcastle.
About 85 per cent of exports through the coal chain out of Newcastle are destined for Japan, Korea and Taiwan.
161.4 million tonnes (mt) of coal was exported through the Port of Newcastle during 2016, up 3.3mt from the previous year.
Exports continued to rise during 2017, with an increase of 2mt between January and August compared to the same period last year, reflecting the continued recovery and strong global demand for the commodity.
The Hunter Valley Coal Chain. Image: HVCCC.
Weathering the storm
In the five years to 2016, 11 operating mines in the Hunter Valley had been shuttered. More than 20 per cent of its coal mining workforce – about 3500 personnel – had been put out of work.
Long associated with coal mining, the Hunter’s regional hub of Cessnock was not unaffected by the reversal of fortunes.
However in 2010, coinciding with the depression of the region’s coal mining industry, construction of the $1.65 billion Hunter Expressway project – a 40km dual carriageway that cut 28 minutes off travel time between Newcastle and the Hunter – had begun.
Cessnock Mayor Bob Pynsent said much of the Hunter was fairly lucky, with its newly unemployed workers able to side-skill into construction and associated trades for the expressway, which as a by-product had also opened up real estate in the region.
“Initially, tradespeople left their jobs to move into the more lucrative mining industry,” Mayor Pynsent said.
“When there was a rationalisation of employment opportunities in the coal industry around 2010, those same people were able to leave mining industry and be absorbed into the boom in housing that flowed from the construction of the highway project.”
Since the start of 2016, the cyclical nature of mining has provided new opportunities in the coal industry, with better-than-expected thermal and coking coal prices driven by increased demand from Asian markets.
2016 export data from Coal Services revealed that global demand for NSW coal had reached record levels, with exports increasing by 1.5mt on the year before, defying predictions from some that coal would diminish as a key export.
The figures also revealed a record volume of 161mt of coal was exported through the Port of Newcastle that year.
Mr Galilee said demand for NSW coal would remain solid across its main export markets.
“Current figures from coal services suggest another strong year of demand for NSW coal year for 2017,” he said.
“The International Energy Agency (IEA) recently released its South East Asia Energy report, which indicated that coal demand would increase in the region by near 4 per cent annually to 2040.
“Combined with declining Indonesian exports over the same period (from 290 metric tonnes carbon equivalent (mtce) in 2016 to 170mtce in 2040) the IEA expects Australia, including NSW with its high quality coal, will increase its exports by more than 15 per cent to 2040.
“This is good news for the NSW economy as coal and other minerals exports are our State’s most valuable exports.”
Mr Galilee said the Hunter would see positive affects across the spectrum.
“New figures from coal services show there were just over 20,600 coal production jobs in NSW as at July this year – over 1300 more than at the same time last year, and the highest since March 2015.
“Many of these new coal mining jobs are in the Hunter, with over 1000 more local coal mining jobs than a year earlier.
“It’s good news for local communities and as well as for the more than 3600 local Hunter businesses that supply the mines.”
HOW CAN INDUSTRY AND GOVERNMENT WORK TOGETHER TO NURTURE A ROBUST MINING INDUSTRY?
A message from NSW Minerals Council chief executive Stephen Galilee.
CONTINUED strong demand from established markets in Japan, Taiwan and Korea, as well as China, along with significant growth across emerging markets in Southeast Asia demonstrate the significant economic opportunities for NSW, provided we get the policy settings right.
This includes an efficient planning approval system and a regulatory regime that does not become a significant burden to our industry.
Since the current Government came to office in 2011 the NSW mining industry has had to prepare nearly 200 submissions on more than 110 proposed regulatory or policy changes – over one a month.
While some of these changes have been positive, many have involved additional compliance burdens and costs.
We’ve been working hard to secure improvements and relief for the industry, while maintaining the high standards of environmental protection the community expects.
Importantly, we’ve worked to secure improvements in planning approval timeframes, including a commitment from the NSW Government to halve average planning assessment time frames for major mining projects by the end of its current term.
To the NSW Government’s credit, this commitment appears to be on track. While there is still more be done, if we can lock in policies that support NSW mining, we’ll build on our industry’s positive export figures, attract investment and create more jobs in our State.