ANZ Research also expects growth investment in oil, gas and coal markets to remain subdued. However, the impact will broaden to the wider resources industry.
Capital for use in energy and mining capacity expansion will be ever harder to come by. The issuance of debt to fossil fuel companies is running at its lowest share of the non-Chinese corporate bond market since 2005, according to Bloomberg data.
BHP has committed a $A400 million “climate fund” to encourage investment in new technologies.
There is no doubt capital is becoming increasingly difficult to source for the coal industry. Debt financing, in particular, has dried up, forcing companies to look at alternative sources. As such, they are now focusing on survival rather than expansion.
As a result, production and exports have fallen in recent years. Exports from the top four suppliers in the seaborne thermal coal market (Australia, Canada, US and Russia) reached a peak of 420 million tonnes (mt) in 2017 and are forecast to fall below 400mt in 2020.
Daniel Hynes is Senior Commodity Strategist at ANZ