New South Wales Will Finally Seal the Order for All Mining Firms to Reserve 10% for Domestic Supply

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Around mid-February, all miners expect Australia’s biggest coal exporting state to require them to set aside 10% of their output for domestic use.

Reuters first reported on January 31st that by the middle of February, New South Wales is expected to issue a regulation requiring all mining companies in the state to allot up to 10% of their output for domestic consumption.

The Department of Planning and Environment spokesperson said they would release the guidelines after they have reached out and talked to miners.

“The draft revised directions allow suppliers the option to provide coal from their own production or to strike an agreement from another supplier to meet their obligations under the directions,” the spokesperson said.

The initial plan for implementing this decision is to curb the increasing energy costs. More households are experiencing ballooning power bills. It will also regulate the supply chain disruption. 

The administration had hoped to implement the extended order by the end of January, but miners have been in opposition.

The department did not disclose the number of tonnes of coal needed.

Paul Flynn, Chief Executive Officer of Whitehaven Coal (WHC.AX), stated that the government sought to secure between 3 and 5 million tonnes. However, the business pressed the state to clarify how that shortage estimate had been calculated.

“Directions issued in December required a dozen coal mines that supply power plants in New South Wales to fill a shortfall in supply at a capped price of A$125 a tonne – well below the export price currently at about $265 a tonne – under a deal with the federal government.

“The mines are mainly owned by Glencore Plc (GLEN.L), Peabody Energy (BTU.N), New Hope Corp (NHC.AX) and Thailand’s Banpu PCL (BANPU.BK),” mentioned Reuters.

The state now intends to extend the mandate to all coal producers within the state, including companies who export all of their products, such as BHP Group (BHP.AX), Whitehaven Coal (WHC.AX), and Yancoal Australia (YAL.AX).

According to BHP, the new regulations may impact its ambition to remain operating the state’s biggest coal mine, Mt. Arthur, until 2030.

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