A new report by Richard Denniss, Chief Economist at The Australia Institute, identifies an emerging economic risk of building ‘too many coal mines’.

The report examines the potential economic harm flowing that a major expansion and construction of new coal mines can result cause, including:

• Lower coal prices associated increased supply (and associated reductions in royalty and corporate tax payments
• Decline in the terms of trade,
• Job losses in existing coal mines and regions,
• Bankruptcies of coal companies and the inability to meet obligations to remediate disused mine sites

When you are in a hole, stop digging focusses on scrutiny of the macroeconomic policy which is driving down coal prices and delivering poor financial outcomes for governments and communities.

“The belief that the mere construction of new mines is, in itself, a source of economic benefit precludes the possibility that it is possible to have too many mines,” Dr Denniss said.

“A system which judges each coal mine application in isolation, ignoring the fact that hundreds of such applications are on the table, will inevitably fail to accurately predict the economic benefits.

“The idea that you can double the supply of a product already suffering declining demand without further collapsing the price doesn’t pass the policy sniff test.

“But just as the problem is glaringly obvious, so too is the solution.

“A moratorium on new coal mines would certainly stabilise prices, which would be good news for coal workers in existing mines, and avoid building giant white-elephant infrastructure for stranded assets,” Dr Denniss said.

Public polling

In September 2015 The Australia Institute commissioned Research Now to conduct a national opinion poll of 1408 people, selected by nationally representative sample sizes by gender, age and state or territory. Results in Table 1.

Table 1. National polling results – New coal mine moratorium

Newcastle polling

In September 2015 ReachTel conducted a poll for The Australia Institute of 764 residents of the NSW electorate of Newcastle.

Table 2. Newcastle polling results – New coal mine moratorium

Do you support or oppose a global moratorium on new coal mines and coal mine expansions, as part of the Paris climate agreement in December?