Queensland produces the largest amount of metallurgical or coking coal in the world.
Queensland Rail (QR) is the last publicly owned commercially viable freight rail system in Australian.
Coal is transported to port by QR National which the Qld labor Government wishes to privatise by the issuing of shares costing about $2.50 – $3 each — QR National stock pitched as growth story in $7bn float THE AUSTRALIAN 11 October 2010
The coal transported from Goonyella, the Surat and Bowen basins, ends up in the smelters of countries like India and China. Many of these smelters use blast furnaces like the one pictured here.
Do you know how much CO2 is produced by coking coal? Do you know if it is more or less than thermal or steaming coal?
The main chemical reaction that occurs in the production of iron from iron ore is:
Fe2O3 + 3CO —> 2Fe + 3CO2
So for every 2 atoms of pure iron (Fe) produced in the blast furnace, 3 molecules of carbon dioxide are produced.
There are intermediate reactions (using limestone flux) that produce CO (carbon monoxide) for the main reaction shown above.
The claim by Andrew Fraser that since Qld produces mainly metallurgical coal and should be exempt from any price placed on carbon is unscientific and illogical. Coking coal produces CO2 emissions and it is hypocrisy to say that because it is involved in steel production it should be exempt from controls to reduce environmental effects
How does the Qld Treasurer, Andrew Fraser, get away with the following statement?
“On the issue of revenues potentially dropping because of carbon pricing, he said QR National mainly hauled metallurgical coal used in steelmaking, rather than thermal coal used for power.” — QR National stock pitched as growth story in $7bn float THE AUSTRALIAN 11 October 2010
Somehow, according to Andrew Fraser at least, CO2 emissions from coking coal are exempt from carbon pricing. Why? Is there a clean coal technology used in the smelters of India and China? No. So how do we arrive at the real cost to the environment of using this method of production of metals like iron, steel, aluminium, copper etc? Presumably we price the carbon used as we would in any other process like power generation.
Fraser claims that
“… QR National is exposed to metallurgical coal for which there is no substitute, so carbon pricing wouldn’t have a demand affect on it.” — Fraser downplays carbon price effect AAP October 11, 2010, 8:09 pm
The use of Qld coking coal is not confined to the production of iron and steel.
A coking coal aluminium smelter apparently produces 16 tonnes CO2 emissions per tonne of aluminium produced (see http://www.calsmelt.com/energy-environmental.html ).
There are alternatives to the use of coking coal in Aluminium smelters.
There are electrolytic methods of smelting Aluminium that involve reduced production of CO2 emissions (Calsmelt).
Solar powered steel production is proposed as an alternative (see it discussed at Calsmelt)
Meanwhile the Qld government has spent $35 million in advisory fees for the treasurer to make such statements at the public float of QR national yesterday (10 October 2010).
The consultants at KPMG must have been working overtime to generate the necessary spin by Andrew Fraser. Just look at the other great one liners the treasurer came out with:
Mr Fraser said the privatised company would “bat at the top of the order” of Australian listed corporates, meaning it would be a top 50 stock. The government will keep a 25-40 per cent stake but did not intend to remain a long-term shareholder. “Our intention is to sell that down into the future.” — QR National stock pitched as growth story in $7bn float
THE AUSTRALIAN 11 October 2010.
The Queensland treasurer and his advisers need to explain why he wishes to sell Queensland Rail so cheaply and why he wants to exempt the contracts on the coal that it freights from a carbon price.
CO2 emissions from coking coal exports are nearly as large as emissions from steaming (thermal) coal. Why should they be exempt from a price on the carbon emitted?
The government borrows $billions to build this rail infrastructure but now wishes to sell it at a low price of $3 – 5 billion. (QR float to be priced for election lift):
Sources close to the deal said the government was expected to choose a final issue price that would likely see a healthy post-float gain.
That would give Premier Anna Bligh an easier time at the polls in the next election, which is due before March 2012.
It would also mean a cheaper sale of the state assets to the global and local institutional investors the Queensland government expects to take up most of the shares.
Just look at the amount of railway track owned by QR.
It is by far the biggest owner of rail infrastructure in Australia and it is the only publicly owned freight rail system.
What is more the Treasurer is seeking to exempt the Queensland coking coal from a price on carbon.
His facile argument is that there are no alternatives to metallurgical (coking) coal.
QR National freights mainly thermal coal in NSW.
Global demand for coking coal, used in steelmaking, may rise 14 per cent to 257 million tonnes this year and 6 per cent next year, driven by China and India, UBS said. – BLOOMBERG
Why shouldn’t governments exact the real cost to the environment of carbon pollution, the damage to the land by extraction of coal and the transportation by rail and sea.
Environmentalists are seeking a price on carbon to make ecologically sustainable alternatives more viable. That is only part of the picture. Much of the land being used for mining and transport is unceded Aboriginal land. Mining companies and governments are using Indigenous land Use Agreements (ILUAs) to circumvent Native Title Legislation and International convenants (UN declaration on the rights of Indigenous People).
Why should Qld coal be different?
The Queensland government is seeking to ignore the Kyoto convenant on Climate Change.
It is trying to to circumvent its responsibilities to Aboriginal people by selling all the rights to resources to the private sector.
It is denying the contribution of Queensland workers to building up Queensalnd Rail that has performed a publlic service for 150 years.
The goverment’s failure to manage this important public asset underlines its inability to provide good government.
It has put the sale of QR National in the hands of UBS, Credit Suisse Group, Goldman Sachs & Partners Australia, Bank of America’s Merrill Lynch unit and Royal Bank of Scotland Group — and all these stand to make millions for advising the sale. Accoring to the the QR national prospectus, the banks will each receive a fee of A$3 million and share equally 0.8 per cent of the proceeds from the shares sold to institutional investors.
The polls are due in 2012, by then it will be too late.
No coherent answer has come from the Tresurer or his department on any of these questions.