Melbourne: Satiating China’s demand for coal

Good news for coal mining industry in Australia. The Chinese government continues to support growth, meaning long-term demand and strong prices for coal. In Sydney there were already signals in China that the economy was picking up, adding that the government was already actively supporting and injecting money into their economy.

“Long term, China will demand coal for energy.”

Chairman of Yancoal, Mr Li said that, despite the recent softening of the thermal coal market, he expected that towards the end of the third quarter Chinese demand would increase.

Yanzhou, which has a market capitalisation of $11.6 billion, owns 78 per cent of Yancoal Australia, created via the merger with Gloucester Coal to build Australia’s largest listed coal play.

Mr Li said that because of the merger, the parent company had acquired new opportunities to develop in new markets and attract new customers.

He added that Yanzhou was in early talks with Hong Kong trader Noble Group about identifying opportunities to improve logistics to maximise sales. This would have the effect of creating new mining jobs in Australia.

The downturn in Australian mining and construction has been well documented but the industry is far from suffering.  In fact, it has burst its banks and has spilled out into becoming a global industry with Melbourne being the hub.

Real growth has come because of the rise of mining equipment, technology and services (METS), where Victoria is the largest exporter in Australia.

Melbourne was the natural fit for EMR Capital, with many of its executives have lived and worked in the city their entire lives. This hive of activity has attracted the likes of private equity firm, which taps into Melbourne’s rich talent resources to service this rising hub of Australian – and global – mining.

Forecasts predict China will need to build the equivalent of all the housing in Singapore 15 times over in the next decade. This requires a prolific amount of material. “We see a lot of buyer traffic. China is buying half of the world’s metal in mining projects available for sale, that traffic is very key. Standing here in the centre of this traffic is where you really want to be as an investor,” says Mr Chang.

Tapping into Victoria’s rich mining heritage.

Melbourne has long been the Australian heartland of mining, dating back to the gold rush of the 1850s and extending on with base metal mining from the 1880s, creating a rich pedigree of knowledge.

The University of Western Australia’s Ian Satchwell was the co-author of the Sharing the Benefits: enhancing Australia’s global leadership in the mining value chain report. He says “Melbourne has always been a mining capital. But what we’re seeing now is a growth in mining. It’s an expansion of the sector into knowledge and technology rich fields in mining services. There is very definitely a cluster effect there.”

“We’ve got a growing number of junior companies coming through that are able to access and then deploy globally the skills knowledge and technology required to make them competitive in resource rich destinations around the world.”