Canberra : Australia’s Port of Newcastle, the world’s biggest coal port, has announced a transition away from fossil fuels, saying “continued investment in Australian coal is a losing proposition”.
It said on Sunday that the long-term outlook for coal was a threat to the port and it needed to diversify its business.
Rob Henderson, a former chief markets economist at the National Australia Bank (NAB), said the Port of Newcastle’s announcement was indicative of the shift underway in the world of power generation and investment.
“Newcastle, the world’s largest coal port, is now transitioning to a lower carbon world and is actively planning for the time when less of the Hunter’s wealth and income will be generated from coal,” he said in a statement on Monday.
“It should reaffirm to investors that the transition away from coal is taking place rapidly now, that continued investment in Australian coal is a losing proposition in the medium to long term and that diversification is critical.”
The Port of Newcastle is currently the world’s largest coal export port by volume. It is the economic and trade centre for the resource rich Hunter Valley in Australia, an area blessed with enormous agriculture, viticulture and tourism export opportunities.
Coal exports currently represent just under 90 per cent of tonnage through the port. It currently handles more than 2,258 ship visits per annum.
Roy Green, who was appointed chairman of the Port of Newcastle on Sunday, said the port would pursue a strategy of diversification with a new container port and cruise terminal in the pipeline.
“Coal has been at the heart of the Hunter’s economy for the better part of two centuries, and it will continue to be central to the prosperity of the region and Port of Newcastle for some time to come,” Green said. “However, there is also an urgent need to diversify the Hunter economy and the port’s business.”
Henderson, the former Chief Economist (Markets) at NAB, said: “Renewables seem to have reached a tipping point, with many countries now reporting that the cost of electricity supply is coming in well beneath present tariffs for coal fired power.”
“The economics of rising relative costs of coal generation is driving investors away from fossil fuels, especially coal, towards wind, solar and hydro. This shift will only accelerate ahead.”
“Of course, this means that the government’s continued backing for the mega Adani coal mine in Queensland’s Galilee Basin is backing a dead horse. The government should rule out NAIF funding for Adani and follow the Port of Newcastle’s lead by using NAIF funds for environmentally sustainable and economically justifiable projects in Northern Australia.”
“The Port of Newcastle if following the money trail, by adopting the position taken by major Australian banks, including my former employer NAB, over recent weeks, who have sought to distance themselves from financial ties with new coal projects and focus on the growth industries of the future,” Henderson added.