Change and challenges aplenty but coal’s long-term future remains bright

Change and challenges aplenty but coal’s longterm future remains bright

Paul Flynn, Managing Director and CEO, Whitehaven Coal

Despite ongoing supply chain issues and labour constraints plus weather events and COVID-19,

Australia’s mining sector has still managed to deliver historic results over the last financial year. A new export revenue record of A$413 billion – up 37% from the previous period – confirmed the critical role we play in supporting the Australian economy.1

Global factors such as the ongoing sanctions against Russian coal and gas and the ensuing global energy supply shortfall have contributed to customers reassessing their priorities and renewing their focus on energy security – triggering something of a ‘coal renaissance’. We are currently seeing the benefits of this through high commodity prices, but we know this will not last, as global markets normalise and countries move towards net zero by 2050. Coal demand will inevitably taper but our industry is uniquely positioned to continue supporting energy security and decarbonisation. While the volatile global landscape is often top of mind, we’ve also seen change at a local level. A change in Federal Government has brought changes in domestic energy policy settings. These include a renewed focus on the energy transition and Australia’s opportunity to contribute to global efforts by developing and exporting our abundant reserves of rare earths, aluminium, lithium, copper, cobalt and nickel. Importantly, the Federal Government has also acknowledged the ongoing importance of coal to Australia’s economy, not only in terms of taxes, royalties and export revenues, but also for the significant impact it has on regional jobs and communities. The global pivot towards supply stability is especially visible in Asia, which is home to the youngest fleet of coal-fired power stations in the world, and where we see the greatest opportunities. By 2030, Asia will produce more than half of the world’s economic output; consume 40% of its energy; and be home to a middle class of almost 3.5 billion people.2 Together, China, India, Japan, Korea, Taiwan and South East Asia account for 75% of global coal demand.3 Both thermal and metallurgical coal will remain essential to support the growth and development of the many emerging economies across the Asian continent.

1 Minerals Council of Australia, 2022, Media Release – Resources lead Australia’s exports medal tally 2 Department of Foreign Affairs and Trade, 2017, Foreign Policy White Paper 3 International Energy Agency, 2020, Coal 2020 – Analysis and forecast to 2025

This means, despite some global and domestic upheaval, that our outlook has not changed. The future is still bright. The coal industry can keep doing what it has been doing for years – operating responsibly, investing in regional areas, and generating jobs and other social benefits. This is a role we are particularly proud of at Whitehaven. In the face of ongoing economic disruption, Whitehaven delivered significant direct financial benefits to regional communities over FY22, with $510 million in wages and supplier payments into north west NSW alone. Ensuring the benefits of our operations are felt locally is fundamental to what we do, whether that be through local procurement or our investments in community initiatives. Over FY22, Whitehaven engaged 315 local suppliers and invested $1.53 million into community initiatives and donations, such as the Nurruby Boggabri Early Learning Facility and the Clontarf Foundation.

The work we do to empower communities comes in many forms and extends beyond investment. Our updated hiring practices reflect our commitment to diversity in the workforce - 11.8% of our employees identify as Aboriginal and/or Torres Strait Islander, and 15.3% are female. We acknowledge there is more work to be done when it comes to gender diversity, and this year we have set a target to reach 20% of employees and 20% of company leadership being women by FY26. Looking ahead, we continue to look for strategic opportunities, including further development to meet ongoing Asian demand. We are one of the few coal producers with growth options, and our Vickery development in NSW offers an opportunity to bring on new supply to meet ongoing Asian demand. Our Winchester South development in the Bowen Basin is leading our push into metallurgical coal and could be our first operation beyond the Gunnedah Basin. We are looking forward to bringing our proven, locally focused approach to the region to enable communities across the Bowen Basin to benefit from our future operations. Ultimately, this approach underpins everything we do. While it is tempting to fixate on what’s happening globally, our purpose as an industry here in Australia remains to support local communities and sustain the regional areas in which we operate. The continuation of global volatility and the potential for a local economic downturn will assuredly bring further challenges for Australia and our sector – but also plenty of opportunities. Through it all, Australian coal remains well-positioned for a bright future. 

It’s been an eventful 12 months for the global economy and the mining sector. Global events have reinforced coal’s long-term role in supporting both energy security and decarbonisation – highlighting just how difficult it is for the market to replace coal.