Coal Exports to China Discussed at Australian Senate Meeting

At a meeting held on June 4, 2021, the Australian Senate Economics Legislation Committee discussed the situation of coal exports to China with representatives of the Department of Industry, Science, Energy and Resources, focusing on ships carrying Australian coal being unable to enter Chinese ports and the impact on Australian producers. The full exchange on these issues was as follows:

Senator CHISHOLM: I want to ask some questions about coal exports to China particularly. Could you provide an update on how many ships carrying Australian coal remain stranded at sea and unable to enter Chinese ports?

Mr Trotman : The latest advice I have received from post is that there are 16 ships still waiting to discharge their cargo.

Senator CHISHOLM: Could you give us a sense of the arc of history on this? How many have we been talking about over the last six months?

Mr Trotman : You are probably testing my memory on that. I think it was roughly, in the last six months, up to 80 ships waiting to be discharged. In the last six months, it has reduced progressively down to 16 now. I would probably like to get back to you with more detail on that. I might take some of that question on notice and give you the specifics over the last six months.

Senator CHISHOLM: Sure. Of the 16 waiting now, would you be able to say what the longest one of those ships has been waiting?

Mr Trotman : I don't have that information. Those sort of questions are probably best asked of the department of foreign affairs in the foreign affairs, defence and trade committee. The officials from the Department of Foreign Affairs and Trade probably have better access to that information. Again, I can take that on notice. If there is information that we can provide, I will get back to you.

Senator CHISHOLM: With regard to the ships that have been waiting throughout the last six months, do you know how long the longest has had to wait?

Mr Trotman : Again, I don't have that information available. It's probably, again, best asked of officials in the foreign affairs portfolio. If I can take that on notice and get back to you with that information, I will certainly do the best I can.

Senator CHISHOLM: What sort of collaboration do you have with the foreign affairs and trade department on this?

Mr Trotman : We do work closely with the post in Beijing. We have a number of departmental officials who are ministerial counsellors based in our embassy in Beijing. Through those counsellors, we receive intelligence and information about contacts with relevant traders and exporters. Again, that information is also shared across government. Principally, the lead on managing this particular issue is in the foreign affairs portfolio.

Mr Sullivan : We'll take that on notice and try to get you as much accurate information that is up to date as possible.

Senator CHISHOLM: Has the government received any official information about coal import quotas in China that would apply to Australian coal this year?

Mr Trotman : I don't have any particular information available. Again, I would have to take that on notice because I don't want to mislead you. It might be that we have received information and it just hasn't been passed through to me. We obviously keep track.

Senator CHISHOLM: You would have thought it would be pretty significant information if they did pass on something like that.

Mr Trotman : Indeed.

Senator CHISHOLM: It would filter down.

Mr Trotman : That is why, again, I can take that on notice and come back to you on that. We do actually monitor the situation. We rely on the latest information that we receive from our post. We also rely on intelligence that we receive from the latest trading houses and the information that is then passed on to the various trading houses and through the media.

Senator CHISHOLM: There have been some reports that some of that Australian coal that has been sitting at sea has been onsold to Vietnam, India and other markets. Is that something you are aware of?

Mr Trotman : I am aware that the coal has been onsold to other economies. I don't have statistics around the actual figures and the number of shipments with me. I am aware of that.

Senator CHISHOLM: Is that something that is just left to those companies to arrange themselves? Given it is a fairly complex situation, I suppose, is it something that the department of trade or foreign affairs is involved with as well?

Mr Trotman : Remember that the coal waiting to be discharged is actually owned by Chinese traders. It is more an issue about the arrangements between the local Chinese traders as the suppliers and the buyers, be it the coal-fired power stations or the metallurgical coal steel mills waiting to receive the coal. It is not really in the realm of the Australian government in terms of intervening in those arrangements between the traders and buyers. It is more an issue that we leave for those two parties.

...

Senator CHISHOLM: Has the department analysed what is at risk in terms of jobs and exports as a result of the situation in China?

Mr Trotman : I will invite the Chief Economist to give a brief overview on that.

Mr Karunarathna : We produce a forecast every quarter, the Resources and energy quarterly, where we look at the performance of the sector by commodity. Our analysts look at each of the commodities and where the trade flows have been going. The story with coal is that the informal restrictions from China have largely been diverted to Japan, South Korea and India. India has had a significant uptick both in terms of metallurgical and thermal coal. The premiums for coal have actually declined, but countervailing that is that China's actions have pushed up all coal prices. That has coincided with some supply constraints across a lot of logistical areas across the world. That has caused prices to spike for all types of coal. The effect of the price premium reduction has been more than offset by just how much coal prices have increased. That means that the prices that coal producers are getting are much higher than the production costs they face.

Senator CHISHOLM: Strictly in terms of export volumes, there is no noticeable drop-off as a result of what is happening informally in China. I think that is how you described it?

Mr Karunarathna : I have some numbers. They are very marginal drop-offs. There was 41 million megatonnes of total coal that was going to China that dropped off in the last six months compared to the previous six months. That is almost all being taken up by India, with 16 megatonnes. Japan and South Korea were predominantly the rest. Overall, for 2019-20, we exported 213 megatonnes of thermal coal. In the 2020-21 year, we expect that to drop off marginally to 206 megatonnes before increasing again from 2021-22 and then, indeed, continuing to increase over the five-year outlook period of our last publication. The story is similar with metallurgical coal, with 177 megatonnes exported in 2019-20. We're forecasting 173 megatonnes in 2020-21 and then, again, it increasing from 2021-22 onwards.

Senator CHISHOLM: Thanks. I picked up some anecdotal feedback whilst travelling through regional Queensland. I don't know if you would have visibility of this. Some of the smaller miners don't necessarily have that same access to market that some of the bigger miners do. Is that something that the department has picked up in terms of finding an alternative selling point?

Mr Karunarathna : We look at production costs faced by the different producers. What we can say is that the prices today are much higher in global markets than the production costs that coalminers are operating.

Mr Sullivan : In terms of that diversification that Jee was talking about, the government allocated $20.1 million in the last budget for the Global Resources Strategy. One of the key planks of that is how we turn those short-term customers that have come from the drop-off in trade to China—Japan, Taiwan, Vietnam and others—into longer term customers. That is also about picking up smaller companies all the way through to the bigger companies. You are right; the bigger companies have more resources and more outreach capacity. The Global Resources Strategy is about that diversification not just in coal but in exports across the resources and critical minerals sectors.

Senator WATT: I want to follow on from Senator Chisholm because this issue about the future of coal exports is a pretty big one in Queensland. Like Senator Chisholm, some of the feedback I have been receiving, both in regional Queensland and from the coal mining companies that I have been speaking to, is that the loss of the premium price that you referred to is starting to have an impact, particularly on high-cost operations, which typically seem to be the smaller companies. Have you been receiving any feedback to the effect that while the bigger players may at this stage may not be too affected, for higher cost producers the changes to the price are starting to have an impact?

Mr Karunarathna : I can't speak to what my policy colleagues might have discussed with the industry. From what we are seeing, we certainly saw last time I appeared at this committee that the premiums were lower. At that stage, prices had just started to spike because of the weather events in New South Wales and Queensland. Since then, China's demand for coal has been extremely high. They have run down their stocks and are looking for suppliers from all over the world. That is pushing up prices everywhere. The price increases that we are seeing more than offset the premium losses previously.

Senator WATT: I suspect that most of my other questions are going to require your policy colleague rather than data.

Mr Karunarathna : Sure.

Senator WATT: By all means stay at the table if there is room for everyone. I will get an answer from Mr Trotman. Mr Trotman, you are not getting any feedback around the risks to higher cost producers?

Mr Trotman : No. I recall at the last hearing you asked very similar questions. Obviously, we work very closely with the Queensland Resources Council. We work closely with the Minerals Council of Australia. We receive advice directly from companies. We think the sector in Queensland is holding up. Obviously, we are very mindful that there are always instances where coalmines move in and out of care and maintenance. Obviously, that has flow-on effects for jobs. The government is very mindful to keep a close watch on this situation. I think that was similar evidence that we gave at the last hearing.

Senator WATT: Like Senator Chisholm, I am trying to reconcile what we are hearing privately from mining companies in Queensland as opposed to the reassurances we keep getting from government, be it officials or ministers, that everything is travelling fine. There is quite a disconnect between what the companies are telling us privately and what you are reporting. But you are not receiving any of that feedback yourselves?

Mr Trotman : Not directly. I would be really grateful if you could pass on the details of those particular companies that you are working with. We are very happy to go out and meet with the management and get an insight directly as to the pressure points that they are facing. It would be very helpful if you could pass those details on.

Senator Reynolds: Just to reinforce that, I am sure the minister would welcome companies contacting him directly as well to pass on those observations. It is pretty hard to act if people don't actually pass on these important points.

Senator WATT: I have raised this with the minister myself. I am not going to breach his confidence by telling you what he has told me.

Senator Reynolds: I want to make sure that there is no misunderstanding. You could read into your comment several different interpretations. I know from personal experience with companies in Western Australia and the industry that the minister is very happy for feedback and engages very closely with those who seek to engage him across the sector.

Senator WATT: I am not saying anything.

Senator Reynolds: I am not saying you are. I am saying that those listening or those reading the Hansard could interpret your comments in a couple of different ways. I want to put on the record that he is very happy to receive that feedback.

Senator WATT: Sure. This issue has been starting to get some media attention. I want to take you to a couple of articles. I have copies if anyone needs them. There was an article in the Courier-Mail on 27 April headlined 'China turns off the tap: Brutal coal ban impact revealed'. It states:

Australia's coal trade with China has plunged from more than $1 billion a month to just $30 million in the first few months of the year—

I don't think we've had any figures around this sort of measure today. Have you got any update on the dollar value of Australia's coal trade with China and how that compares to, say, early last year? To save you having to say it again, I acknowledge that there has been some diversion of that trade to other countries.

Mr Karunarathna : We haven't done the dollar figure calculation. We tend to do an overall forecast of our revenue in the Resources and energy quarterly. I will get what we forecast for the current year. We forecast, in terms of values, metallurgical coal will be $23 billion in 2020-21. That is going to increase to $31 billion by 2025-26 in real terms.

Senator WATT: This is just to China?

Mr Karunarathna : No. That is total. I don't know if we have broken it up by country. I might have to take that on notice.

Senator WATT: Yes.

Mr Karunarathna : The figure I mentioned before, the 41 million tonnes of coal going to China, has pretty much dropped to zero, so the numbers you quoted are not surprising. As I mentioned before, the volumes have largely moved to other countries.

Senator WATT: Sure. Again, I don't know who I pose this question to. This article also says that there are no coal sales going ahead with Chinese companies. Is that broadly the case?

Mr Karunarathna : That is consistent with the data we're seeing over the last six months.

Senator WATT: From the department's point of view, there are no new contracts being entered into by Australian miners with China for the export of coal?

Mr Karunarathna : I don't have details on contracts. The volumes that we are seeing in the data have just dropped to zero.

Senator WATT: Okay. This seems to be having an impact on state budgets. Obviously, coal royalties are a pretty important part of state budgets. This article states:

Last year the Queensland state budget revealed royalties from coal had dropped about $2 billion to $1.6 billion—

Are you aware of any impact that the loss of these exports to China is having on royalties?

Mr Karunarathna : We don't calculate the impacts on state royalties. However, as I mentioned before, coal prices have gone up quite markedly. Any premium losses have been offset by those price rises. I'm not sure how old that publication is, but there could be a turnaround in those royalties following the price increases.

Senator WATT: Have there been any discussions with state governments about the impact of changes to exports on the state government royalties for coal?

Mr Karunarathna : I don't believe so.

Mr Sullivan : I haven't.

...

Senator WATT: I have one other article I want to refer to.

CHAIR: Go through it as quickly as you can.

Senator WATT: This is a very recent one. Again, I have copies here if people need it. It is 20 May, a couple of weeks ago, headlined 'Real risk to economy from China trade war: BHP Minerals Australia president Edgar Basto'. It's probably one of the first times I have seen a senior executive at one of the mining companies express serious concern about the situation with China. I will read you a couple of quotes from Mr Basto. I gather they came from a speech he delivered. He said:

The outlook looks good long term but unfortunately the here and now is a slightly different story … What we are seeing—

and he is referring to the China import ban—

in terms of the impact to coal prices is significant and it does have an impact. Overall, I think it's a risk to the Australian economy and it's an important risk and I think we should be candid in the way we evaluate the risk.

Again, Mr Trotman and Mr Sullivan, you're saying that no company has expressed concern to you in the manner Mr Basto is raising in his speech?

Mr Sullivan : That is not what I said, Senator. We have regular discussions with major companies. All of them express concern about how trade with China is going to be managed. It would be unfair and incorrect to say that those issues haven't been raised with us.

Senator WATT: I was certainly getting the impression from the evidence we've received that the department hasn't been receiving concerns from mining companies about the future.

Mr Trotman : In the context, I think we were talking about individual mining companies in Queensland. We do talk to the intermediates and some juniors but also the majors, so we do get intelligence from those particular companies. I note from your quote of the article that Mr Basto said the outlook looks good long term. I guess, coming back to my answers earlier, that would reflect similar sentiments that the head of coal at BHP is also reflecting in the media.

Senator WATT: To be clear, then, mining companies, be they big, small or intermediate, have raised with the department their concerns that the China import ban will have an impact on their profits?

Mr Sullivan : That is not what I said. It is about how it is going to be managed. It is about the outlook for diversification for their product and the longer term outlook for new product development, such as in critical minerals. There will also be diversification of not only countries for current resources but resources from Australia. So it's not a specific concern. It is more generally about how that is going to be managed. As I said to the other senator in talking about what the government is doing about it, that is part of the impetus for the Global Resources Strategy.

Senator WATT: Sure. We have some questions about that too.

Mr Sullivan : It is about how we look at that diversification and how we help diversify those markets and use leverage to consolidate those markets where there has been diversification. Figures were quoted of a drop-off of 41 megatonnes and that being largely replaced in a very short period of time. That gives us a sense that Australia has a high quality product to sell and that diversification is possible. That is happening in real time.

Senator WATT: Does that mean, Mr Sullivan or Mr Trotman, that the department doesn't consider what we're seeing with the China import ban and its effect on prices to be a risk to the Australian economy in the way Mr Basto suggests it is?

Mr Sullivan : I think that is putting words into my mouth.

Senator WATT: I am trying to understand your position.

Mr Sullivan : My view is probably irrelevant in that. The coal figures that were just given show that that is being managed. Is there a risk? Of course there is a risk, but it is the degree to which the Australian resources sector, which is pretty resilient, is bouncing back to manage those risks. In terms of the outlook, it has continued to look at that in a positive sense.

Senator WATT: So you have briefed your minister, then, that what is going on with the China import ban is a risk to the Australian economy, be it verbal or written?

Mr Sullivan : I think we've not talked about it in the specifics. I think you are asking me to say that there is a risk to the Australian economy that is outlined in the media article. Of course there is an issue when trade is cut off with a particular country and how that is managed. In briefing the minister and in discussions, we talk about how that is best managed and how you de-risk that as much as possible.

Senator WATT: So it has been raised with the minister?

Mr Sullivan : About what?

Senator WATT: The risk and what can be done about it?

Mr Sullivan : That's part of normal discussions about trade and the outlook.

Senator WATT: Another thing Mr Basto said—I understand that we've had some different evidence about this today—is that:

the price of our Australian coal - met coal - is basically half. So that is a big challenge. It's not a situation that is sustainable …

He states:

I have heard comments like, you know, it is OK, the coal being produced in Australia and in Queensland is being placed in different markets so there's no harm there. I don't think that is right because the differential in price is almost half what we are getting for our coal than what others are getting in China.

Again, what Mr Basto is saying seems to be at odds with what we hear from officials and ministers—that what we've lost in China we've made up elsewhere so there's no real issue. How do you respond to Mr Basto?

Mr Trotman : Mr Basto has the best insights into his relationship with his customers. As we've said in previous evidence, we are very mindful of the situation in China. We are keeping very close oversight and engagement with Chinese authorities. We have people on the ground in China. In terms of price and what individual companies get for their coal, it's up to those companies to make those commercial decisions on the alternative markets where they will send their coal.

Mr Karunarathna : I can try to reconcile the statements with the data that we are seeing. Yes, it's true that the differential is lower in terms of premiums that countries such as Indonesia get. Yesterday's metallurgical thermal coal price was $155.50, which is 46 per cent higher than at the same time last year. Yes, premiums are low and the differential that other countries are getting is high because China is beating up prices. But the current prices are still very favourable. Does that help? Does that reconcile—

Senator WATT: How do you explain what Mr Basto is saying, then?

Mr Karunarathna : There are two elements. There is the difference between what Australia and other countries get and then there is the difference between what Australia gets compared to, let's say, last year. One is the differential. On the differential, I take Mr Basto's words as a given. We've certainly seen the differential increase. But at the same time, because of the excess demand and supply constraints, we are seeing prices across the board rise.

Senator WATT: We keep hearing from ministers—I am paraphrasing; pick me up if I am wrong—and get the impression from officials that while we have lost exports to China, and it has been a problem, we've made up for it elsewhere; in an overall sense, things are okay. That's certainly what the minister says and I think, pretty roughly, what we are told here at estimates as well. I think Mr Basto is the second in charge at BHP. He's a very senior executive. He references comments like, 'You know, it's okay the coal being produced in Australia and in Queensland is being placed in different markets so there's no harm.' He says that's not right. Why do we keep being told one thing by representatives of the government when representatives of the companies are saying something completely different?

Mr Karunarathna : I can't speak for Mr Basto, but I can speak to the data.

Senator WATT: Mr Sullivan, in light of comments like this from Mr Basto, what is the situation around the market? Is everything fine because we've got other markets?

Mr Sullivan : I think Mr Basto and I go back almost a debate. If that was taken from a speech on the perspective of BHP, perhaps the best thing for me to do is look at the speech and the statements by Mr Basto with respect to BHP. The evidence I have been giving and the analysis and insight colleagues have provided is that, using coal as the specific example, the gap is quite small in terms of what we've made up. The evidence I've given is that the government is investing money to try to increase that diversification base more broadly across the resources sector and to consolidate the diversification that has happened to date. With respect to the individual circumstances of BHP and BHP's customer base, perhaps it's best I take on notice Mr Basto's speech. I can follow it up with BHP and, as was offered, get the context and get a reconciliation between what we are seeing at macro levels and what is happening at that micro level.

Senator WATT: Has anyone from the department or the minister or his office met with BHP or spoken with BHP about these concerns?

Mr Sullivan : The answer would be yes. In terms of the dates of when that happened and who, I will have to take that on notice.

Senator WATT: Does that mean that BHP and possibly other companies have raised with the department that we haven't necessarily made up what we've lost in China through other markets?

Senator Reynolds: Mr Sullivan has taken that on notice. Rather than speculating and perhaps—

Senator WATT: No. What he took on notice—

Senator Reynolds: putting words in the mouth of the minister and other officials, I think it is appropriate, as Mr Sullivan has said, that he go and have a look at the speech to determine the context. He will do the assessment that you have asked for. I think you are now asking the officials to speculate.

Senator WATT: You are the chair.

CHAIR: Senator Watt, I am going to share the call, to be perfectly honest.

Senator WATT: I want to ask the last question that I haven't asked.

CHAIR: You can restate your last question if it is different.

Senator WATT: Well, I haven't asked this question: have BHP or other mining companies already made representations to the government, be it ministers or the department, that in fact the diversion of coal to other markets hasn't made up for what they've lost in China?

Senator Reynolds: I will take that on notice for the minister.

Senator WATT: No. My question is to Mr Sullivan.

Senator Reynolds: You asked about the minister.

CHAIR: The minister has the right to take it on notice.

Senator Reynolds: Senator Watt, you don't get to choose. You asked a question about the minister. I said I would take it on notice.

Senator WATT: Mr Sullivan, about the department?

Senator CANAVAN: You don't get to direct your questions to individual witnesses. They are all to the minister.

CHAIR: That is correct.

Senator WATT: Can I ask whether the department—

Mr Fredericks : The department will take that question on notice.

Senator CANAVAN: With regard to this article, there might be a slight misunderstanding from Senator Watt's questions. The relevant quote from Mr Basto has been read out. To repeat it, Mr Basto said:

I don't think that is right—

He was referring to other things. The key bit I am focusing on is this:

because the differential in price is almost half of what we are getting for our coal than what others are getting in China.

I think that probably is right, from what I hear. What I think Mr Basto is saying there is that China is now paying, if you put it the other way around, double for some of its coal needs than what we sell overseas. I think you might have alluded to this issue before. I don't think the implication is that if China were to start buying our coal again, we wouldn't necessarily get the same price that they are paying for coal from other markets right now, would we?

Mr Trotman : It's hard to predict these things, Senator. We would probably be working in a different business if we could predict these things. It probably does make sense that prices would readjust depending on which volumes are coming into China. If there are greater volumes, well, then—

Senator CANAVAN: The price will come down.

Mr Trotman : the price will come down.

Senator CANAVAN: Presumably one of the reasons China is now paying double the price or so for coal than before is that it has had to go to markets of lower quality or higher cost for what it previously accessed from Australia. Is that generally true?

Mr Trotman : Yes. That's correct.

Senator CANAVAN: So if it were to return to the higher quality, lower cost market, the market would readjust. The market wouldn't clear or the price equilibrium would not be what China is having to pay at the moment?

Mr Trotman : Again, it's hard to predict where those markets will go. Generally, common sense would steer in that direction.

Senator CANAVAN: We weren't, of course, getting prices double what we see today when China was buying our coal, so that is probably the best example. Have sought to get information of some form about what China is paying for coal now? I doubt you would have a highly comprehensive data set of that. Do you have any qualitative indications of what they are paying for coal, given they are not buying from our markets?

Mr Sullivan : I think we are getting anecdotal reports. My colleague might have some more information.

Mr Karunarathna : We have some charts. I don't have the numbers on the charts to be able to say what the difference is. I am happy to take that on notice and give you the numbers.

Senator CANAVAN: In broad terms, are they paying a premium?

Mr Karunarathna : They are paying a premium, definitely, yes.

Senator CANAVAN: There have been reports I have seen that China has also struggled to get supply of coal to keep power plants going and what have you. Are those reports confirmed, in your view, or confirmed from the evidence you see?

Mr Karunarathna : Yes. We have read analyst reports that suggest that Chinese coal plants are running down their stocks. They are using up the stuff they have and still trying to buy more.

Senator CANAVAN: The other implication of Senator Watt's questions is that it would be better if we could sell to China. I agree with that. It is not exactly clear how we would do that or what Senator Watt would pose to do that. Have you had any indication from the Chinese government what action we would have to take to re-establish the trading relationship?

Mr Karunarathna : I think that is a question for DFAT.

Senator CANAVAN: But you haven't. Have any of the companies that Senator Watt mentioned to you provided information about what specific actions the Australian government would have to take to re-establish trade in coal to China?

Mr Sullivan : Not to my knowledge. Again, as you well understand, that is a question for foreign affairs. We are part of that mix. As Mr Trotman says, we've got counsellors on the ground in Shanghai and other countries who work in a whole-of-government sense to provide advice back. But that is really a whole-of-government issue.

Senator CANAVAN: The Chinese embassy sent to the Australian media last year a list of 14 grievances they have with our country, including that we are not allowing Huawei to build our 5G network. They are also upset about the foreign interference laws, which have bipartisan support in this parliament. They obviously didn't want an inquiry into the origins of the coronavirus. They don't like us speaking about the international law in the South China Sea. They also don't like us speaking about human rights allegations in Xinjiang against the Uyghurs. They are also against the laws we passed recently to allow the federal government to veto any agreements with other nations. This is an extraordinary list for another country to demand of another country. It seems to be behind some of the restrictions on Australian trade we've seen to China. Are you aware of any other countries we sell resources to making any kind of demands like this to continue trade?

Mr Sullivan : I am unaware.

Senator CANAVAN: So no other countries act like this?

Mr Sullivan : That would be an issue for foreign affairs.

CHAIR: It is a bit outside this portfolio.

Senator CANAVAN: I get that. You are obviously speaking to other countries about trading issues. But you are not aware of any other nation making similar requests or demands?

Senator Reynolds: Perhaps I can add to this. This government will always stand up for Australia's interests. This is a partnership with industry. Australia remains ready to trade in this and other commodities with China. As I have said, we will always stand up for our interests.

Senator CANAVAN: Absolutely.

Senator Reynolds: This is an issue for foreign affairs and for the trade portfolios. I commend many of the companies, as you have heard from the officials today. The companies involved with not only this commodity but other commodities have diversified to address current circumstances. So it has been a commendable joint evident on behalf of government and with various industries, including this one, to diversify markets.

Senator CANAVAN: Absolutely.

Senator Reynolds: Again, we stand ready to do more business with China, but we're not going to compromise our own interests.

...

Senator CANAVAN: I am happy to let you know, Chair, that I am moving on. We spoke earlier about other countries that had picked up the slack, so to speak. Do you have figures on our market share of Indian thermal coal imports? Can you update it? What share of all Indian thermal coal imports is Australia's thermal coal? What are the latest figures you have on that?

Mr Karunarathna : The latest figures in the last six months with the diversification have really changed that number. I don't have the percentage shares, but I have the six-month to date numbers. In terms of total coal, Indian has imported nine billion tonnes. That is up from around two billion.

Senator CANAVAN: Are you sure it is nine billion?

Mr Karunarathna : Nine million megatonnes. It used to be around two. Japan is around 40 and South Korea is around 17.

Senator CANAVAN: But you don't have an up-to-date figure on the total size of Indian coal imports? I would need that figure as well, not divided by how much they import.

Mr Karunarathna : I might have to take that on notice.

Mr Fredericks : We do have some numbers on India's forecast for met coal, which I think is in the REQ.

Senator CANAVAN: I was asking about thermal. I realise that we have a well-established met coal position in India. I believe we're the primary supplier of their metallurgical coal needs. We have traditionally supplied only around five per cent of India's thermal coal import needs. Could you take on notice what has been the change in our market share for Indian thermal coal imports from before China's coal bans in the most up-to-date figures we have? Does that make sense?

Mr Karunarathna : I'm happy to take that on notice. I am looking at total imports for India. In 2020, for thermal coal, it was 165 megatonnes. In 2021, it was 185 megatonnes. I quoted a figure of around—

Senator CANAVAN: And 2021 is a forecast, presumably, is it? Is that right?

Mr Karunarathna : Yes. It is a forecast.

Mr Fredericks : I think the 2022 forecast for thermal coal for India grows to 190 million.

Senator CANAVAN: You are saying there is quite strong demand in India for seaborne thermal coal as well? On those figures there is growth?

Mr Karunarathna : Yes. It's opportunistic buying. There is a bit of that. The challenge Mr Sullivan alluded to is trying to convert those newly formed relationships into longer term ones, particularly when India has said that they want to be self-sufficient with thermal coal with lower quality coal. There is this higher quality coal that is available that they are looking to buy opportunistically. The idea is to try to convert that.

Senator CANAVAN: Finally, on India, have you got up-to-date information on India's attempts to more efficiently produce coal from domestic sources? I believe they've made some reforms recently to the leasing of coal tenements and that Coal India Limited is going through a reform process as well. How successfully is India increasing its domestic coal production along with their targets?

Mr Karunarathna : I know they are investing in infrastructure. I don't have specifics. They are looking to, as I said, be self-sufficient. They are looking to build ports and rail infrastructure. I don't know if my colleagues have any more information on that. There is more detail than I have stored in my head.

Senator CANAVAN: There was a report in Bloomberg.

CHAIR: I will have to reshare the call.

Senator CANAVAN: It was a report in Bloomberg just this week. I will quote from it:

Russia is spending more than $10 billion on a railroad that will help it ramp up coal exports to Asia.

What is our understanding of Russia's plans to increase coal exports? Is that a risk to our coal exports to the region?

Mr Karunarathna : Our understanding is that Russia is looking to expand its coal production. I think I gave evidence, including in a question on notice, that Russia's coal is of comparable quality to Australian coal. It ultimately comes down to relationships. That is what the Global Resources Strategy is trying to secure.