Coal industry job scare baseless

A report prepared for the Australian Coal Association titled Impact of Proposed Carbon Tax on Black Coal mining claims that the government’s proposed carbon tax is going to cause eight coal mines to close prematurely and will cost thousands of jobs between now and 2021.

The report claimed 4700 jobs would be lost from existing coalmines due to the carbon price

The Sydney Morning Herald’s Ross Gittins wrote on June 20 that the “job losses” described “don’t involve any actual fall in the number of people employed in an industry”, but instead “refer to the extent to which employment grows by less than it otherwise would”.

Even Citibank, one of the world’s biggest corporations, criticised the report. Company representatives told the June 16 Australian: “Our analysis suggests that a carbon price is unlikely to force significant mine closures.”

The report makes the absurd argument that by adding a few dollars to the cost of a commodity that is currently selling for $131 a tonne (coking coal used to produce steel is selling for even more) coalmines will close. The report is not worth the paper it is written on.

Mines to close?

In the five years from June 2006 to June 2011, the export price of Australian thermal coal rose from $56 a tonne to $131.

Consider the size of that price rise for a moment. In five years the mining corporations have more than doubled the price they have been able to fetch for coal. They are absolutely raking it in; they are swimming in cash.

The Australian coal industry has the bargaining power to keep the price high. But it also says that adding a few dollars more a tonne would turn the buyers away in droves.

Federal climate change minister Greg Combet said on June 8: “At a hypothetical $20 carbon price, the average liability for methane emissions would be around $1.60 per tonne of coal.”

Adding $1.60 to the export price of thermal coal represents a rise of less than 1.5%.

The Australian Coal Association report drew forecasts from the Australian Bureau of Agriculture and Resource Economics (ABARE).

ABARE projects a slow decline in the price of coal over the next decade to $87 a tonne.

It is worth noting that ABARE does not have a crystal ball — and has a history of downplaying peak oil and issuing fairly conservative projections about Australian coal export growth.

Its 2006 Australian Coal Exports report, ABARE forecast that although the cost of oil tends to push up the price of coal, oil’s price “will decline steadily to below US$40 a barrel by 2015 — in real terms”.

Contrary to that forecast, oil sells at about $100 a barrel today, and many commentators project further rises in coming years.



Crikey’s Bernard Keane noted in >a 2008 article that in each of the previous five years, ABARE had projected the price of oil to fall; but each year instead of falling the price had climbed.

Peak oil and rising coal prices

In an April 27 article at PeakOil.com, economist Jeff Rubin directly attributed the rising cost of coal to the rising cost of oil. He forecast that China might reach its coal production peak as soon as 2015.

Constrained Chinese coal output would exert upward pressure on the price of coal.

Australian coal prices have not faced a long-term decline since the late 1990s — beyond the peaks and troughs the trend has been one of consistently rising prices, which fits Rubin’s argument that peak oil will keep coal prices high.

If this decade-long upward trend continues — even at a more gradual rate — thermal coal price could rise as high as $200 a tonne or more by 2020. At this price, the carbon tax would be like a mosquito bite on an elephant.

CFMEU head echoes industry spin

Disappointingly, the Construction Forestry Mining and Energy Union (CFMEU) national secretary Tony Maher has flirted with the coal industry scare campaign, calling for special compensation and exemptions for the mining industry.

In June, he accused the Greens of being in “la la land” and trying to “single out mine workers as some sort of trophy hunt”.

However, by July 6, Maher began to take a different tack, saying the “coal industry is making record profits — earning more than $1 million per worker — and have the highest profit margin of any Australian industry. He called on the Australian Coal Association to “end its carbon scare campaign”.

In the Latrobe Valley, the CFMEU mining and energy division has taken a different approach.

Branch secretary John Parker told the May 6 Melbourne Age the union was working with other community groups to develop a “transition plan” to phase out coal while ensuring workers in the coal industry are not left behind.

Parker said: “The social contract of the coal industry will have waned in the next five years unless they come up with something that doesn't produce the carbon or captures the carbon. They will have missed the boat.”

Assistance vs transition

Claims that a (weak) carbon tax, which will add a few dollars a tonne to the price of Australian coal exports, will somehow restrict the growth of the industry in any meaningful way are thoroughly dubious.

If the tax was to shut down mines, that wouldn’t be a bad thing combined with a program for a just transition for workers into alternative employment.

A worker-friendly transition plan would need to provide well-paid, long-term employment in renewables and other alternative industries. It would need direct government intervention and involvement to work.

A #spanishrevolution against coal?

The prospect of public enterprises, such as manufacturing plants for the renewable energy industry, being set up in Australia’s coal-dependent regions — with the explicit intent of employing coal industry workers — is abhorrent to the ideology of the free market.

Such an intervention is nonetheless possible and practical. But it would take a government committed to organising a transition to a zero emissions economy.

And such a project would inevitably face a ceaseless onslaught from the corporate media, so the government would need to be backed up (and held to account) by vibrant social movements (think the Greek uprising, the Arab spring, #spanishrevolution) and a militant trade union movement.

Such a situation may seem far off, but history has shown things can change rapidly. In the meantime, as the coal industry spouts a grubby and dishonest fear campaign, the climate movement needs to keep looking for ways to open a discussion with coal workers and coal-dependent communities.