Mining to remain the mother lode, with clean coal among 25 other reasons to be confident about growth
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24 March 2014: Mining will remain a true cornerstone of the Australian economy into the future – and clean coal has been identified as a related opportunity that presents real future wealth-creating potential for Australia.
According to the full release of Deloitte’s Positioning for prosperity? Catching the next wavereport, 25 sectors – including clean coal – present tantalising growth opportunities for Australia into the future (see table below).
Deloitte National Mining Leader East Coast Reuben Saayman said: “Mining remains a genuine growth wave for Australia.”
“It presently represents about 10 percent of our economy and, as long as we address cost challenges, has a lot of runway left.
“But we know as a nation that we can’t just rely on mining. We need new growth drivers that also capitalise on our advantages that include world-class resources and proximity to the world’s fastest growing markets in Asia.”
In addition to mining and a ‘Fantastic Five’ of gas, tourism, agribusiness, international education and wealth management, the Deloitte report identifies a further 19 future wave growth areas that include clean coal.
“Australia has huge coal reserves, and according to the International Energy Agency’s world energy outlook for 2013, by 2035, fossil fuels will still represent around 75 per cent of the global energy mix, compared to the approximately 82 per cent today,” Mr Saayman said.
“But the world’s desire for clean air will throw a curveball into our ability to earn as much in the future from the likes of thermal coal as we have in recent years.
“The Bureau of Resource and Energy Economics says that Australia will export more than $20 billion of thermal coal annually by 2017-18. This is clearly a lot of money – and national income we don’t want to risk.
“Luckily, there is a lot we can do about question marks over the longer-term potential for Australian thermal coal, ranging from tax and regulatory action by governments to the pursuit of operational excellence by individual miners.
“Their focus has been on production rather than cost – but costs now need to be sustainably addressed through, for example, innovation.
“The 250 million tonnes of thermal coal that Australia will export to earn that $20 billion a year – double what it was ahead of the global financial crisis – plays a key role in powering the world’s electricity generators.
“But it is role is under threat. Global gas reserves – including Australia’s – are one cleaner alternative.
“So driving down the cost of the technologies and processes involved in burning coal more cleanly has the potential to re-invigorate growth prospects for coal exports and deliver us another future wave economic opportunity.
“There are major economic and technical challenges to clean coal, but the future payoff to Australia from a reinvigoration of prospects for our vast thermal coal reserves would be massive.
“That alone ensures coal retains the potential to be a standout growth sector – and that Australian businesses should therefore be closely monitoring developments in clean coal technologies and costs.”
The full release of Positioning for prosperity? Catching the next wave, the third in Deloitte’s Building the Lucky Country series, analyses growth prospects across all major parts of Australia’s economy. The report highlights Australia’s:
- Current growth wave: mining, which presently represents about 10% of our economy
- Next growth waves: the ‘Fantastic Five’ sectors of gas, agribusiness, tourism, international education and wealth management. If we address the barriers to their success, Deloitte estimates these could be worth an extra $250 billion to the economy over the next 20 years, have the potential to match mining and keep Australia near the top of the world’s prosperity charts
- Future growth waves: 19 growth pockets that, if they have the same relative potential to unlock growth, could contribute at least a further $150 billion to Australia’s economy. More importantly, these growth pockets are mainly in high job creating areas of the economy.
Collectively, these sectors, the ‘Deloitte Growth 25’ (DG25), represent a group of compelling growth opportunities for Australia over the next 20 years. A companion media release considers the national impacts of the full DG25.
NB: See our media releases and research at www.deloitte.com.au
Last Updated: Friday, 28 March 2014
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