Rising coal prices boost Australia's export earnings

A new commodity report released by the National Bank of Australia predicted an average coal price this year of US98 ($ 132.50) this year, up 12 percent from last year.

Coal prices in Newcastle have risen more than 40 percent in a year, reaching their highest level in seven years, but the industry is becoming increasingly isolated as traditional sources of investment funds dwindle.

One of the major indicators of the global coal market, the McCloskey Spot Price Index for Newcastle thermal coal, tied to Japanese power plants, has risen from US $ 101.60 per tonne ($ 135.40) to US $ 115.50 ($ 156) during the last weeks of June.

A year ago, the McCloskey Index stood at US $ 79.95 ($ 105), which means that this figure has grown by almost 45 percent per year.

Analysts say higher prices indicate supply constraints. In the years when sentiment was against the use of coal, mining companies did not respond by opening new mines or expanding existing ones to boost production.

But with large banks increasingly reluctant to lend to coal projects, analysts say the industry will have to look for unconventional sources of funding such as private equity. They say the lack of finance also means that prices for thermal coal, as well as coking coal used in steel making, are unlikely to return to the low levels that saw thermal coal dropping below $ 50 ($ 68). per ton in the first half of 2016.