Australasian Mining Review
Issue link: http://ebook.aprs.com.au/i/37922
12 The Australian Coal Industry Creating value for Australia’s future The coal industry plays a vital role in Australia’s economy, energy security and community. It is Australia’s largest export earner (valued at $55 billion in 2008-09) and employs around 140,000 Australians – 40,000 directly and 100,000 indirectly, mainly in regional Australia. With over 54% of our electricity generated from black coal it also underpins the security, reliability and comparative low-cost of Australia’s electricity supply. T he Australian coal industry is working with government to invest in solutions to reduce emissions from the utilisation of coal. Through the COAL21 Fund the industry is raising $1 billion over 10 years from a voluntary levy on coal production to support the demonstration of low emission technologies for coal- fi red power generation. These technologies can also be applied to other industrial processes such as steel and cement manufacturing. Australia was the only one of the world’s 33 advanced economies to grow in 2009 during the worst global recession since the Great Depression. A principal reason for this was our continued coal exports. The importance of coal in the economy is also evident in its growing share of GDP. This share has more than doubled, from 1.7 % in 2006-07 to 3.5% in 2008-09, making it the largest contributor to the mining sector. Every year, the coal industry pays billions of dollars to Commonwealth and State governments in the form of corporate taxes, natural resource royalties and payment of freight charges. In 2008-2009 coal royalties were worth $3.1 billion to the Queensland Government and $1.3 billion to the New South Wales Government. This fl ows back into the community in the form of state funding for hospitals, schools and roads. The coal industry also contributes tens of millions of dollars annually to fund community social infrastructure. This is in addition to the benefi ts that fl ow from its day-to-day operations – including jobs and business opportunities, contributions to public infrastructure, and support for education, training and apprenticeships. 1. Coal and the global fi nancial crisis Coal is a principal driver of Australia’s growth and economic prosperity. It played a key role in preventing Australia going into recession in 2009-10. In May 2009 the Reserve Bank forecasted that Australia would go into recession for six months but by February 2010 it had amended this view as the impact of the global fi nancial crisis in Australia was very mild in comparison to the outcomes in many other countries, where deep recessions have been experienced. In short, future coal exports of both thermal and metallurgical coal will continue to grow at 5% per year. Thermal coal exports are likely to grow at a faster rate (6.7% per year) than metallurgical exports (3.5% per year). This is largely as a result of expected thermal exports from the Surat Basin towards the end of the forecast period. 2. The coal industry’s substantial contribution to the Australian economy The coal industry pays billions of dollars annually: • to governments in the form of royalties, taxes and charges (eg for shire, transport, freight and port services); • to workers in the form of wages and salaries; • to businesses through purchases of goods and services; • to shareholders and investors; • to the community – e.g. through superannuation funds and contributions to community social infrastructure. From a total income of $64 billion in 2008-09 the coal industry made the following payments: Coal Industry Selected Payments and Recipients – 2008-09 Royalties – to state governments Taxes (company, etc.) – to federal, state and local governments Wages and salaries, etc. – to workers and their families Contract, sub-contract payments – to individuals and businesses Goods and services purchases – to businesses R&D expenditure – to the research community and to projects Interest, insurance, payments – to the fi nance sector Depreciation, amortisation, change in stocks, etc. Dividends to shareholders, investors, superannuation funds, etc. Retained earnings for re-investment Total of the above (recurrent) expenditure allocations Net capital expenditure – on plant, equipment, buildings, infrastructure, etc. A$ billion 4.5 8.4 4.4 5.0 16.0 0.9 2.1 2.8 14.0 6.0 64.1 10.4