Australian government welcomes high fossil fuel prices, ships coal to Ukraine

Scott Morrison’s administration is celebrating rising coal exports and pledging to send a shipment of coal to Ukraine

Scott Morrison, then treasurer, now prime minister, with a lump of coal in parliament in 2017 (Photo: Commons)


The Russian invasion of Ukraine continues to send shockwaves through global energy markets – sending the price of oil, gas and coal to near all-time highs – but Australia’s government has done little to hide its glee at the increased earnings set to be gleaned by Australia’s fossil fuel industries.

With much of Europe and North America looking to sever ties with Russia, countries have been scrambling for replacement supplies of oil, gas and coal, and it has sent prices surging.

Consumers are bearing the brunt of higher energy prices, with petrol prices surging to unprecedented highs while rocketing coal and gas has seen Australian wholesale electricity futures up almost 30 per cent since the start of the year, also returning to near all-time highs.

The disruption caused by the conflict in Ukraine has contributed to surging global coal prices, exceeding US$450 per tonne (A$608) in some markets.

The price for coal from the Australian port of Newcastle for March delivery is still trading above US$330 per tonne (A$445), a record high. European oil prices are still currently trading above US$110 per barrel, prices not seen since 2014.

Much of the Asian gas market is pegged to the oil price, and so the region’s gas prices have followed oil higher.

Some one has to pay for it, and that will be the consumer. But rather than being concerned about the consumer impacts of high price of fossil fuels, Australian prime minister Scott Morrison and his government have welcomed it.

“Total coal exports in the three months to January were $24.27 billion – a staggering 159% increase on the same period a year earlier and 18% above the earnings for the three months to October 2021,” federal resources minister Keith Pitt recently celebrated in a statement.

Australia has even promised to make a coal donation to Ukraine which prime minister Scott Morrison said will “power up their resistance”. But doubts remain around when and if the delivery could actually happen.

There had initially been speculation that Australia had simply arranged for additional coal to be sent from a neighbouring country, like Poland, in an arrangement that would mirror those similar to Australia’s provision of arms and humanitarian assistance.

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But, on Sunday, Morrison made clear that the coal would be sent from Australia to a destination port somewhere in Ukraine.

“It’s our coal. We dug it up. We’ve arranged the ship. We’ve put it on the ship and we’re sending it there to Ukraine to help power up their resistance and to give that encouragement,” Morrison said during a press conference on Sunday.

“We understand that it can power up to about a million homes and this is incredibly important.” The 70,000 tonnes of coal would be enough to fuel a medium-sized coal fired generator for around 3-5 days.

A spokesperson for Whitehaven coal confirmed that the cost of the coal, and its delivery, will be borne by the Australian government. At current prices that would be paying Whitehaven as much as $31 million for the donated coal, using taxpayers’ money.

The government will entrust the delivery of coal to commodities trading firm Trafigura.

“In a very tight global market where demand for our thermal coal remains very high, Whitehaven has managed to secure the extra supplies without impacting existing contracts to other international partners,” Pitt said in a statement.

It’s not clear if or when the delivery of the coal may be made, given Russian warships are patrolling the Black Sea, effectively blocking access to Ukraine’s ports.

Around one-third of Ukraine’s electricity generation was provided by coal-fired power stations before the conflict. Supplies have been tight, with much of the country’s coal mining industry located in the contested Donbas region.

This article was produced by Renew Economy and republished under a content sharing agreement.

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