Investment in coal assets
Which coal assets does Wesfarmers own?
This year, 2.5 per cent of our revenue and 3.3 per cent of our earnings before interest and tax came from our Resources division. The Resources division owns and operates the Curragh coal mine in Queensland’s Bowen Basin, producing metallurgical coal for steel production and thermal coal for domestic power generation. It also holds a 40 per cent interest in the Bengalla mine in New South Wales, producing thermal coal for power generation in international markets.
Why does Wesfarmers own coal assets?
Metallurgical coal is a necessary component in the steel-making process and the coal industry is a major contributor to the Australian economy. In many developing countries, coal is the only affordable and available bulk source of uninterrupted energy/electricity and is required for the economic growth needed to improve living standards and alleviate poverty.
Wesfarmers continues to support a carbon reduction mechanism that enables Australia to meet its international emission reduction targets. While we expect that the energy mix will change over time, moving to more renewable energy sources, all feasible scenarios show that it is highly likely that there will be a role and a need for coal as a source of energy and steel-making for many years.
Wesfarmers continues to consider its Resources division to be a valuable addition to its portfolio.
What can be done to make coal ‘cleaner’?
Wesfarmers Resources is part of COAL21, which is an initiative of the Australian coal industry to support the pre-commercial demonstration of low emissions coal technologies, including carbon capture and storage. This is being done through the COAL21 Fund, which is expected to raise more than $1 billion in the first ten years through a voluntary levy on coal production. More than a quarter of the fund has now been committed to demonstration projects as well as a national research program managed by Australian National Low Emissions Coal Research Ltd. For more information, see http://www.minerals.org.au/resources/coal/climate_change_technology/coal21.