Mara Pattison-Sowden

2016 to be tough year for coal industry: economist

A LEADING economist believes Queensland's coal industry is in a better position to survive a potential Chinese economic downturn than its international competitors - but it will not make 2016 easier for the struggling resource sector.

University of Queensland professor John Quiggin listed low international market prices, a struggling Chinese economy and Indian government moves to minimise imports as concerns for the coal industry in 2016.

But he said other coal markets would struggle more with a potential Chinese downturn than Queensland.

"The first casualties from that would likely be in the US where the miners are already going broke," he said.

"Of the exporters, we and the Indonesians are probably in the strongest position."

Queensland Resource Council chief Michael Roche pointed to record output from Queensland mines last year to demonstrate the industry's health.

"Coal exports from Queensland hit a new record of 220 million tonnes in 2015, up 2% on the previous record of 216 million tonnes in 2014," he said in a statement.

He said the Indian market was becoming a major export market for Queensland.

"Coal exports from Gladstone port to India in the six months to December 2015 were more than 19% higher than in the same period of 2014 and nearly 24% higher than in the first six months of 2015. This evidence of a growing Indian market for Queensland's lower-emission high-energy coal refutes the anti-coal activists' claims about the economics of new coal projects such as the proposed Adani and GVK Hancock mines in the Galilee Basin."

But Prof Quiggin said the industry faced a low price point and a faltering economy in China.

"Prices for most resources, but particularly coal, have already fallen sharply even as the Chinese economy wasn't looking particularly bad," he said.

He said the emerging Indian market looked promising in the short term - but the country was looking to minimise long term coal imports.


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