CARGO LENS
Driskell Tate, Global Energy Monitor researcher. For private and investor-led projects, Australia and Russia head the table – but in Australia, many mining projects are struggling to secure financial close. “In 2021, Australia shelved 103 million tonnes of proposed mining capacity and downsized ongoing projects by 37 million tonnes. Meanwhile Russia’s newest projects, primarily intended for export to Asia, are now in a shambles because of the war in Ukraine,” he said. Without a doubt, says Driskell Tate, investments in new mines are at odds with Paris climate targets for 1.5 degrees, which require a phase-down in coal production of 11 percent each year. “It’s also at odds with the International Energy Agency’s Net Zero 2050 roadmap, which requires no new mines or mine expansions,” he added. It is difficult to find investors willing to put their name behind mining projects, said Driskell Tate, although this can be circumvented because mining companies can raise finance without specifying particular projects. “In Australia, so many mines have been shelved and cancelled – they have done Ryan Driskell the exploration, Tate assessed the resources and lined Global Energy up potential opera- Monitor tors and the project just can’t get into production because they can’t get the finances.” There is often a huge political incentive for politicians in Australia, the U.S. and elsewhere to support the coal industry, he noted, “but at the same time they are up against a market not necessarily telling the same story. In the U.S. we have had so many coal companies go bankrupt in the past five years – it has been quite astounding.” Physical access to a new mine development is also a challenge. For example, in Australia there are a half-dozen other projects in the same region as the
proposed Carmichael development, all on hold because they are dependent on being able to use the railroad access to Carmichael. “These projects are all backlogged, hoping for the railroad to be built – or they can’t get the coal out.”
APPROVALS COMPLICATIONS
Marc Willim, general manager for AAL Shipping, agreed that environmental concerns are growing. “Everything is getting more complicated to get approval for transport,” he said. “Some of the coal mines in Australia are very close to the Barrier Reef and that has caused some impact on how much traffic is allowed for exports. On the one side it is getting more difficult to build or expand coal mines, and on the other side they don’t really have the finance to do so.” This would also apply to any plans to build new coal-fired power plants, he added: “There would be massive issues getting financing.” Because of its trading pattern, AAL’s main involvement in mining is limited to Australia. “We have regular services and carry large pieces Marc Willim – some for minAAL Shipping ing and some for mining-related port infrastructure,” Willim said. “We recently carried some big ship loaders from Asia to Australia – fully erected, weighing a few hundred tonnes, a substantial deck cargo. We also carry conveyor belts, either to load mining products in port or for mining activity. We are also engaged in bringing spare parts, mining trucks, big tires and all kinds of mining equipment.” Last year was a very strong one in the global market for high and heavy machinery – and demand for mining machinery was no different, said Robert Berg, market intelligence and finance manager at Wallenius Wilhelmsen.
“Global exports of mining machines shot up approximately 50 percent from the Covid-induced trough in 2020 and, with the exception of the coal-driven strength leading up to the last peak in 2018, one would have to go all the way back to 2014 to find similar volumes,” he said. “With our significant market presence in transporting this type of equipment, we also benefited from this strong momentum. We experienced strong volume growth in all our major trade lanes, with rebounding demand across Europe, North America and Oceania. We also saw significantly increasing appetite for machinery in South America. Similarly, growth was geographically broad in terms of export regions.”
STRENGTH EXPECTED TO CONTINUE
Berg said that in the near term, he expected demand to remain strong. “Due to the supply strain caused by the pandemic, our customers are reporting solid order backlogs, which would help carry demand in the time ahead. At the moment, it’s all about meeting the strong demand out there for both us and our customers.” WW does not expect any material shifts in terms of the type of mining machinery cargo it carries in the near term, Berg said. “There will always be a demand for parts and components for servicing and maintenance, and we certainly welcome what we are seeing in terms of miners wanting to replace what has now become an aging fleet. We believe there is more runway in this replacement cycle,” he said. While some commodity prices were already at decade-high levels, the conflict in Europe continues to push prices upwards, which may result in even further increased capex activity, Berg predicted. “There has been an increase in activity in commodity sectors such as the gold segment. On behalf of AAW Projects (Metso Outotec), WW Group recently supported the carriage of a ball mill plant from Italy into Queensland for a gold mine expansion project.” www.breakbulk.com
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