Interview with Fran Kelly, Radio National Breakfast

Fran Kelly
Coal, coal exports to China, emissions targets, World Trade Organization, ANZ bank, Australian radioactive waste.

KELLY: As the Morrison Government prepares to take China to the world trade umpire over punitive barley tariffs, the trade dispute with Beijing has deepened on another front. There are now more than 60 vessels carrying at least $700 million worth of Australian coal stranded off the Chinese coast; they've been anchored there for at least the past four weeks, being refused permission to dock and unload their cargo. Keith Pitt is the Minister for Resources and Water. He joins us in our Parliament House studios. Minister, welcome to RN Breakfast.

KEITH PITT: Good morning to you and good morning to your listeners.

FRAN KELLY: Keith Pitt, how many bulk carriers are now floating off Chinese port? Shipping data suggests at least 66, unofficial estimates say it could be more than 80. What's your latest advice?

KEITH PITT: Well, there are a number, as you've identified, Fran. And I…

FRAN KELLY: [Talks over] What number? I’m trying to get.

KEITH PITT: Well, look, I've certainly seen the media reports. And I don't want to get into the weeds, because quite simply, it's specific to how many mines you have and how many ships are ordered, and how many are on the water and how many have just unloaded, and how many potentially have unloaded recently. So, what we know is, currently, those practices are very disruptive to Australian trade, which is, I think, obvious to all of your listeners. And the challenge for us now is to try and ensure that we can move forward and get back to work.

FRAN KELLY: Okay. But is it true to say that the Resources Minister doesn't exactly know how many ships? Do you have a ballpark figure? You know, you must be getting advice.

KEITH PITT: Well, we're talking to industry every single day …


KEITH PITT: … And, of course, you know, they're raising their concerns with us. But once again, this is one market – we have a number of markets right around the world. In fact, Japan is our biggest market for thermal coal; it's about twice the size currently of what goes into China.

FRAN KELLY: Okay. The Chinese, by way of explanation of the hold-up of these loaded ships, say, quote: there have been many cases where imported coal failed to meet environmental standards. Has China made clear what those standards are and whether the- how these ships loaded with Australian coal could be in breach of it?

KEITH PITT: Well, they've raised technical standards on a number of commodities which go into China. And you've seen, obviously, the tariff issues around wine. But once-

FRAN KELLY: [Interrupts] Yeah. But on coal, what’s the environmental standard on coal that we might be in breach of or accused of being in breach of?

KEITH PITT: Well, once again, Australia's coal is basically the highest quality in the world, particularly out of the Newcastle and the Hunter area. It's incredibly high calorie for value, it's got very low ash content, and I'd be very surprised if any of those standards are being breached. However, we are asking what those technical standards are. We are responding, of course, to Chinese authorities, as are those exporters in Australia. But once again, this is disruptive. It is something which we are very concerned about. And for me, as the Resources Minister, will very clearly as we come out of the COVID pandemic, we want to ensure that we are driving our economy and jobs as strong as we can.

FRAN KELLY: What are you- are you concerned about the wellbeing of the 1000 seafarers on board these vessels? One of them, the Indian flag Jag Anand we've spoken about here on the program; they've been stranded for up to five months, so there's genuine humanitarian concerns for the welfare of these seafarers. What's the Australian Government doing to try and get these ships docked and unloaded?

KEITH PITT: Oh, well, look, of course I'm concerned about those individuals who are on those ships. My understanding is that they're not Australian flagships or Australian sailors. However, you know, this is obviously a very difficult position. And you know, this time of year in China, you know, they look at a thing called the quota. There's been times previously where this has created some challenges around this time of year, that normally they resolve themselves early in the new year, sort of mid to late January. And of course, we're always hopeful that that will be the case. However, we do expect our free trade partners to meet the terms and conditions of the agreements which we have all signed, as we do in terms of imports from those countries. So, whether it's China or Japan or South Korea or others, these are the reasons you have free trade agreement.

FRAN KELLY: Sure. Okay, so that's what's going on right now. But let's look at the future. The Guardian is reporting that Chinese customs officials have been informed that the 2020 quota for thermal coal will be increased by about 20 million tonnes, but Australia will likely be excluded. At the same time, customs clearance times will be reduced for Indonesia and Russian coal. I mean, is it obvious to you, will you say now, as the Resources Minister, that Australia’s just been singled out by Beijing for this kind of treatment?

KEITH PITT: Well, look, we're very concerned, obviously, about what's been happening. And I think all of your listeners can see, you know, what's going on. But the simple reality is I make decisions based on facts, based on advice that's provided. Clearly, we are looking at whether we can utilise the WTO to address some of these issues. But once again, we have a very high quality product that we produce incredibly efficiently, that can be delivered at a very competitive price. But we should never forget that more than 90 per cent of China's consumption in terms of coal, both met and thermal, is produced from their domestic production …


KEITH PITT: … So, there's only 10 per cent that remains for the rest of the world. Obviously, they’re a very strong customer and we would like to retain that.

FRAN KELLY: Yeah. Let's look at facts though, Chinese exports- imports, rather, of Australian coal dropped dramatically from over 5 million tonnes in October to 1.8 this month. Are we already losing this very lucrative market?

KEITH PITT: Well, once again, there are a number of markets that we supply into, including Japan, and South Korea, and others…

FRAN KELLY: [Talks over] Yeah. But are we losing this one? I mean, is that a drop that you're concerned about?

KEITH PITT: Oh, of course I'm concerned, I'm always concerned when we might lose market share in any particular market. But Fran, these are the reasons that we sign free trade agreements, they’re the reasons we've signed to the TPP, it’s the reason we’ve got RCEP over the line in recent weeks. I mean, we've shifted Australia's export commodities from roughly 26 per cent inside agreements to over 70 in our time of government. That's been incredibly important for growth right across the country, whether we're talking about agricultural resources or others; we'll continue to do what's necessary.

FRAN KELLY: Australia is considering taking China to the WTO over the barley tariffs, the Trade Minister confirmed that yesterday. What about over coal? What about this standoff, these stranded ships? Is there any international action that, you know, legal action the Government is looking at?

KEITH PITT: Well, look, our exporting businesses have very strong relationships into their markets – into China, into Japan, into South Korea, into other consumers. You know, they'll obviously look to shift and they'll deal with their contingencies and their risks. But this is a heightened risk for exports into China, that's very clear.

FRAN KELLY: But it's not a WTO matter?

KEITH PITT: Well, we are looking at all options. We are taking all of the details into consideration, we are taking our counterparts at their word that these are technical issues which we’re looking to address.

FRAN KELLY: So, the Government has been taking the Chinese Government at- and their counterparts, as you said, their word that these are technical issues. But our Government’s already- also acknowledged just on Friday there are politics, looks like there's politics behind this trade action from China. The perception is China is punishing Australia over political issues, that's the quote. If that's the case, and given what's at stake, would it be wise to reconsider or pause the movement on the Foreign Relations Bill? The Government wants to get that through Parliament the next two weeks. Are you considering that?

KEITH PITT: Well, Fran, we can continue to walk and chew gum. I mean, we have very strong relationships in terms of trade, we are an exporting nation. Coal in particular’s worth a significant amount; for Australia it’s over $60 billion in any year; into China, it's roughly $14 billion both thermal and met. However, no-one should be surprised that we stand up for our national interest. And what we say to all other countries, is that we expect them to respect our sovereignty as we respect theirs, and that will continue.

FRAN KELLY: More broadly, China burns half the world's coal. Xi Jinping, though, has committed his country to net zero carbon emissions by 2060. Our other major thermal coal customers, as you’ve reminded us, Japan is our biggest customer there, and South Korea are planning to hit carbon neutral by 2050. Is the writing on the wall for coal exports, if not in the near term, at least by 2040, when coal is forecast to fall from 58 per cent of electricity generation in the region to 9 per cent?

KEITH PITT: Oh, look, my view is absolutely not. We'll continue to push…

FRAN KELLY: [Talks over] How?

KEITH PITT: Well, we’ll push down the path around technology. If you combine carbon capture and storage with high efficiency, low emission boilers, and then that’s ultra-supercritical boilers inside coal-fired power stations, we have a 90 per cent reduction in emissions. So, if the issue is to deal with emissions, that is one way to do it. It's why we've set up the technology roadmap; that's why we continue to push forward with a range of different options. But once again, I think coal will continue to be a very, very strong part of Australia's export story. 60 to 70 per cent of all electricity generated in this country is still through coal-fired power stations, and that will continue to be the case for quite some time.

FRAN KELLY: So, you think Japan and South Korea, for instance, who have pledged, you know, carbon neutrality by 2050 will still be importing coal, that they won't be shifting to renewables? You think it'll be technology; it'll be carbon capture and storage?

KEITH PITT: Well, I certainly think that technology will lead the way. We've obviously spoken with a number of Japanese buyers and exporters, those who are invested in Australia. And they said, very clearly, that that decision does not mean an end to imports of coal; it’ll be a very important part of their energy mix for a long time into the future. And I think many of those nations have been very grateful for the hard-working men and women in the resources sector over recent months, that through the COVID pandemic, Australia has maintained its reputation in terms of our ability to continue to deliver what is absolutely necessary to continue their economies.

FRAN KELLY: The Australian Government hasn't committed, won't commit to a 2050 target, but the Prime Minister did say recently he'd like to see net zero achieved as quickly as possible. Recently, the ANZ Bank said it had stopped lending to businesses that didn't have carbon transition plans to net zero output by 2050. And at that time, you effectively called for a boycott of the bank, urging customers, quote: who feel let down by the ANZ’s decision to look around for a better deal. Does that mean the Prime Minister will have a fight on his hand from the Nats if he tries to, you know, get Australia to net zero emissions by 2050?

KEITH PITT: Well, firstly, Fran, we've made commitments to 2030; we will deliver on those commitments. We took-

FRAN KELLY: [Interrupts] Yeah. But the world is looking at 2050, and the pressure is coming on after the US election.

KEITH PITT: We took that plan to the election. It was accepted by the Australian people and we are delivering on it. Now on the ANZ, if they are serious about what they're putting forward, well, they should go out there and make sure they're not providing mortgages to all those individuals who work in the resources sector. They should certainly take away what's probably the biggest provider of profit for them, in terms of those home loans, which are being paid for by the resources sector and those hard-working people who have been out there for the last six months; many of whom have been away from home for that entire period to ensure their business in this country can continue to move forward and can keep the lights on, quite frankly.

FRAN KELLY: Yeah. But why that kind of talk when, you know, the world is moving to net zero emissions by 2050? Most of our trading partners are; the United States are, the United Kingdom is, most in our region are, as I've just pointed out. Why would you get into that punitive language with one of the banks that is just joining where most leading businesses in all the states are?

KEITH PITT: Well, firstly, because it's a statement of fact. Secondly, because this is about actual delivery. I mean, anyone could walk out and provide, you know, a line that says we'll meet a particular target. You need a plan to get there, you need to know what it’ll cost, you’ll need to be absolutely certain about how many jobs may be lost in terms of those changes. And in the post-COVID environment, Fran, I'm about delivering as many jobs as possible, particularly to regional Australia, and that will remain the case.

FRAN KELLY: And just on another issue, briefly, this week, your bill to establish a nuclear waste facility near Kimba in South Australia is introduced into the Senate. Why is specific legislation designating the site necessary, given you have the power as the Minister to name a location? Why are you doing that? Are you trying to remove any legal right to challenge?

KEITH PITT: Well, firstly, there are 12,000 doses of nuclear medicine which are produced and distributed around Australia, for Australians in terms of, you know, identifying cancer and treating cancer every single week. We need to deal with the waste, and quite frankly, you know, it took 7 or 8 years for Adani to put a mine together. Can you imagine how long it might take for this to be finished if we don't do it this way? Now we have a community…

FRAN KELLY: [Talks over] But you could name the location. Why aren’t you, as the Minister, using that power?

KEITH PITT: Well, because quite simply, we want to ensure that we can get this done as quickly as possible without going through endless rounds of court proceedings. Now, we have a community which is…

FRAN KELLY: [Talks over] So you think it would be open to challenge, is the point?

KEITH PITT: Well, of course. Now, we have a community which is supportive. In fact, the Mayor will be in Canberra this week looking to talk with Anthony Albanese and others. Now, the Labor Party have walked away from this, and they have been absolutely supportive for many years. This is- this is a 40-year, 40-year process, Fran.

FRAN KELLY: The traditional owners, though, still aren't on board with it.

KEITH PITT: Well, I’ve met with the Bungala people …

FRAN KELLY: [Talks over] Yep.

KEITH PITT: … And clearly, they are not supportive, but we’ll continue to work with them. There is no native title on the land itself; that was extinguished as part of a separate process back in 2015. And what we know is we have a community which has a majority support, we have a willing seller, we have a location which meets the technical requirements, and they just want to get on with it. I mean, I was in Kimba a few weeks ago; they really just want certainty. That's what we're trying to deliver for them. It's been 5 years; I think they've had enough of consultation. They know more about this issue than anyone else in Australia, Fran, I've got to tell you, as Rowan Ramsey keeps telling me.


KEITH PITT: So, I think we should respect their decision and what they want to do. And this is a desperately needed facility for our nation.

FRAN KELLY: Keith Pitt, thank you very much for joining us.

KEITH PITT: Great to be with you.

FRAN KELLY: Keith Pitt, the Minister for Resources, Water and Northern Australia.