The market substitution assumption was not ignored (do please make intelligent comments in HN).
The assumption was (rightly or wrongly) rejected on the basis that long term thermal coal demand (over the lifetime of this particular project) is projected to decline.
eg: Standard and Poor Mineral intelligence report (2022)
Ignored or rejected is a technicality that does not matter in this case. Assuming that investors did not take into account the forecasted demand is stupid.
For the last 10 years, coal consumption has been roughly the same. Within last couple of years relationship between China and Australia reached low points, at least on surface, as low as vague of threats of military force. Yet, China still buys coal from Australia. Even if it peaks in couple of years, there is still a long way to go and this mine can remain profitable for a while. I don’t know if you read your own links, but right at the top ot says:
Demand for thermal coal is set to decline after peaking in 2024 as coal-fueled power is increasingly replaced with renewables in Europe and the U.S.
However, transitioning away from coal is complex and slow for countries like China and India, which account for 70% of global coal demand and are facing a steep rise in power demand, with a fairly new coal fleet ensuring affordable power.
The success of meeting net zero goals for countries like China, India, and Indonesia hinges significantly on the future economic and technical feasibility of carbon capture, usage, and storage (CCUS) technology.
So yeah, basically the link you posted says that China is gonna be one of the biggest consumers of coal and it won’t change dramatically, unless some fundamental advances in energy tech.
Ignored or rejected is a technicality that does not matter in this case.
Nonsense.
Ignored is "did not address at all, behaved as if unaware of, etc."
Rejected is "was aware of, investigated, addressed, used documented reasoning".
You're commenting in English so do please take this onboard - there is a difference and it matters.
I'm aware of the link I posted, it shows that the major global mining companies expect a decline in thermal coal demand during the lifetime of this coal project.
Whether correct or incorrect it's an informed opinion based on data by those with skin (artual billions) in the game.
Oh boy, here we go, my English isn’t good enough, well this definitely means you have nothing of essence to say.
an informed opinion based on data by those with skin in the game.
This is hilarious. Those with skin in the game actually decided to try to build a mine in Australia. S&P is analytics, they don’t take immediate risks on their analysis. Looks like you don’t understand what “skin in the game” means, I guess this English expression is actually foreign to you.
Let's consider a simplified example. When China cannot buy Australian coal, it must instead buy, let's say, Indonesian coal, which is more expensive. (Otherwise there would have been no need to consider Australian coal at all.) So that makes coal less attractive to China, reducing consumption and giving China more economic incentive to seek out alternative fuels.
Sounds like the policy would work exactly as intended. Anything missing?
China and everyone else is already seeking out alternative sources of energy, not fuel though. But the only viable alternative to fossil fuel available at this point is nuclear. The others are still theoretical. Or you can find some cleaner fossil fuel, like gas from Russia. But it is arguably better. So in near term it is mostly going to be one of the existing producer of coal increasing production and offsetting the deficient and most likely doing it with even worse impact on environment and people. As Russia was preparing its assault on Ukraine, it also made some deals to supply more coal to China and India. And long term it won’t go away. A form of ever increasing carbon and environment tax applied across trade partners will put a long term pressure to move away from coal entirely, because it will force to switch to a different energy source, not just switching suppliers.
Comments
Yeah, exactly. She chose to ignore market substitution assumption, but there is no rebuttal to it.
The market substitution assumption was not ignored (do please make intelligent comments in HN).
The assumption was (rightly or wrongly) rejected on the basis that long term thermal coal demand (over the lifetime of this particular project) is projected to decline.
eg: Standard and Poor Mineral intelligence report (2022)
https://www.spglobal.com/en/research-insights/featured/speci...
Ignored or rejected is a technicality that does not matter in this case. Assuming that investors did not take into account the forecasted demand is stupid.
For the last 10 years, coal consumption has been roughly the same. Within last couple of years relationship between China and Australia reached low points, at least on surface, as low as vague of threats of military force. Yet, China still buys coal from Australia. Even if it peaks in couple of years, there is still a long way to go and this mine can remain profitable for a while. I don’t know if you read your own links, but right at the top ot says:
So yeah, basically the link you posted says that China is gonna be one of the biggest consumers of coal and it won’t change dramatically, unless some fundamental advances in energy tech.Nonsense.
Ignored is "did not address at all, behaved as if unaware of, etc."
Rejected is "was aware of, investigated, addressed, used documented reasoning".
You're commenting in English so do please take this onboard - there is a difference and it matters.
I'm aware of the link I posted, it shows that the major global mining companies expect a decline in thermal coal demand during the lifetime of this coal project.
Whether correct or incorrect it's an informed opinion based on data by those with skin (artual billions) in the game.
Oh boy, here we go, my English isn’t good enough, well this definitely means you have nothing of essence to say.
This is hilarious. Those with skin in the game actually decided to try to build a mine in Australia. S&P is analytics, they don’t take immediate risks on their analysis. Looks like you don’t understand what “skin in the game” means, I guess this English expression is actually foreign to you.
Let's consider a simplified example. When China cannot buy Australian coal, it must instead buy, let's say, Indonesian coal, which is more expensive. (Otherwise there would have been no need to consider Australian coal at all.) So that makes coal less attractive to China, reducing consumption and giving China more economic incentive to seek out alternative fuels.
Sounds like the policy would work exactly as intended. Anything missing?
China and everyone else is already seeking out alternative sources of energy, not fuel though. But the only viable alternative to fossil fuel available at this point is nuclear. The others are still theoretical. Or you can find some cleaner fossil fuel, like gas from Russia. But it is arguably better. So in near term it is mostly going to be one of the existing producer of coal increasing production and offsetting the deficient and most likely doing it with even worse impact on environment and people. As Russia was preparing its assault on Ukraine, it also made some deals to supply more coal to China and India. And long term it won’t go away. A form of ever increasing carbon and environment tax applied across trade partners will put a long term pressure to move away from coal entirely, because it will force to switch to a different energy source, not just switching suppliers.