Opinion
Investors And Safe Energy Havens
Investors spooked by three years of global recession have nervously scanned the globe for failsafe, sure-fire places to park their surplus capital.
The rise of the non-Organization for Economic Cooperation and Development countries is fundamentally altering the world’s energy markets, which underwent a historic shift in 2007 when non-OECD demand surpassed that of OECD. Demand growth outside traditional OECD markets is now the driver in the world’s energy, with fossil fuels continuing to account for 88 per cent of global energy demand and for over half of the annual increase in total energy demand. Another historic shift occurred last year, when China became the largest consumer of energy after surpassing the United States.
By 2035, China will consume almost 25 per cent of world energy after just 9 per cent in 2000. The Energy Information Administration trend predictions in future consumption patterns still put liquid fuels at the top for the next 25 years but coal is still to grow strongly to almost catch up over this period. Accordingly, China will provide the largest share of future growth in the global energy market, and it is here that Australian energy fortunes will be made.
China is now Australia’s largest trading partner, with bilateral trade topping $100billion last year.
Coal is the second most important energy source, making up almost 30 per cent of global energy consumption. For Australia, coal is a “dual use” product, as it meets 43 per cent of Australia’s energy requirements, and just over 70 per cent of those of China.
Over 5 billion tons of coal is consumed worldwide each year. Most is used as thermal coal but the extraordinary growth in Chinese steel production since 2001 has boosted demand for metallurgical coal. Demand for coal in the Asia-Pacific region has steadily risen and now accounts for 66 per cent of total global coal consumption.
China is the world’s biggest consumer of coal and Australia is the region’s biggest exporter. Thermal coal is used in electricity generation, while metallurgical coal is used for steel production. Current Australian metallurgical coal exports are almost twice as large as thermal coal exports.
According to Australia’s Department of Foreign Affairs and Trade, between 1999 and 2009, the value of Australia’s coal rose from $8.4billion in 1999 to $39.4billion in 2009, an increase of over 370 per cent.
This symbiotic producer-consumer relation is already reflected in bilateral Australian-Chinese trade.
Scoring a watershed agreement from Chinese utility, China Power International Development is to supply 30 million tons of thermal coal per year for 20 years, Clive Palmer’s privately held Resourcehouse has cleared the way for an ambitious $8.9billion project to export thermal coal from Queensland’s Galilee Basin. Resourcehouse’s “China First” mine is predicted to begin production in 2013. While the Resourcehouse investment is the most high profile, there are many other success stories of Australian energy companies interacting with China.
The economy of Australia is a developed, modern market economy with a Gross Domestic Product (GDP) of approximately $1.2trillion. In 2009, it was the 13th largest national economy by nominal GDP.
There are, however, some storm clouds on the otherwise sunny horizon of Chinese-Australian relations. Given its growing prominence in the Australian economy, China has taken upon itself to critique some of Canberra’s economic policies. Recently, Cheng Ouyang, a junior diplomat at the Chinese embassy told a business forum that Australia’s “dual-speed and patchwork economy” needed fixing, with Chinese help, commenting, “Australia’s dual-speed (basically, the growing mining sector, while manufacturing and other economic areas are depressed), and patchwork economy would not only hurt its own economic development, but also influence China and Australia’s long-term economic cooperation”, before opining that China’s strengths in these areas could be utilized to “help accelerate Australia’s economic development.” Given that Beijing’s diplomats are hardly known for expressing independent opinions, Cheng’s observations can be taken as reflecting official Chinese government thinking.
Despite official concerns about Australia’s “patchwork” economy, Chinese interest in Australia is not limited to its raw materials. Now, 120,000 Chinese students study in Australian schools and universities. Further impacting Australia’s economy, China is a major purchaser of Australian debt. Seeking further involvement in Australia’s mining sector, in 2009, offers were made by state-owned Chinese companies to invest $22billion in Australia’s resource extraction industry.
Such policies undoubtedly produce unease in Canberra, which doubtless would be happy to see a diversification of investment in Australia. China is not Australia’s sole export market for coal – Indian demand is expected to rise sharply as well due to large-scale coastal power projects now coming online.
Massive supplies of raw materials, a guaranteed market, booming exports of over 370 per cent in a decade – it does not get much better for investors than this. Accordingly, one with surplus money could do worse than investigate Australian energy stocks. But remember, in a world of globalization, China’s yuan is just as “green” as the United States’ dollar or European Union’s euro.
Dr Daly resides in London, and wrote this piece for Washington DC-based OilPrice Intelligence.
John Daly
Opinion
Time and Season Can Tell
Opinion
Why Adaeze Deserves A Second Chance
Opinion
Empowering Youth Through Agriculture
Quote:”While job seeking youths should continuously acquire skills and explore opportunities within their immediate environment as well as in the global space through the use of digital platforms, government, corporate/ multinational organizations or the organised private sector should generate skills and provide the enabling environment for skills acquisition, through adequate funding and resettlement packages that will provide sustainable economic life for beneficiaries”.
The Governor of Rivers State, Sir Siminalayi Fubara, recently urged youths in the Rivers State to take advantage of the vast opportunities available to become employers of labour and contribute meaningfully to the growth and development of the State. Governor Fubara noted that global trends increasingly favour entrepreneurship and innovation, and said that youths in Rivers State must not be left behind in harnessing these opportunities. The Governor, represented by the Secretary to the State Government, Dr Benibo Anabraba, made this known while declaring open the 2026 Job Fair organised by the Rivers State Government in partnership with the Nigeria Employers’ Consultative Association (NECA) in Port Harcourt. The Governor acknowledged the responsibility of government to create jobs for its teeming youth population but noted that it is unrealistic to absorb all job seekers into the civil service.
“As a government, we recognise our duty to provide employment opportunities for our teeming youths. However, we also understand that not all youths can be accommodated within the civil service. This underscores the need to encourage entrepreneurship across diverse sectors and to partner with other stakeholders, including the youths themselves, so they can transition from being job seekers to employers of labour,” he said. It is necessary to State that Governor Fubara has not only stated the obvious but was committed to drive youth entrepreneurship towards their self-reliance and the economic development of the State It is not news that developed economies of the world are skilled driven economies. The private sector also remains the highest employer of labour in private sector driven or capitalist economy though it is also the responsibility of government to create job opportunities for the teeming unemployed youth population in Nigeria which has the highest youth unemployed population in the subSahara Africa.
The lack of job opportunities, caused partly by the Federal Government’s apathy to job creation, the lack of adequate supervision of job opportunities economic programmes, lack of employable skills by many youths in the country have conspired to heighten the attendant challenges of unemployment. The challenges which include, “Japa” syndrome (travelling abroad for greener pastures), that characterises the labour market and poses threat to the nation’s critical sector, especially the health and medical sector; astronomical increase in the crime rate and a loss of interest in education. While job seeking youths should continuously acquire skills and explore opportunities within their immediate environment as well as in the global space through the use of digital platforms, government, corporate/ multinational organizations or the organised private sector should generate skills and provide the enabling environment for skills acquisition, through adequate funding and resettlement packages that will provide sustainable economic life for beneficiaries.
While commending the Rivers State Government led by the People First Governor, Sir Siminilayi Fubara for initiating “various training and capacity-building programmes in areas such as ICT and artificial intelligence, oil and gas, maritime, and the blue economy, among others”, it is note-worthy that the labour market is dynamic and shaped by industry-specific demands, technological advancements, management practices and other emerging factors. So another sector the Federal, State and Local Governments should encourage youths to explore and harness the abounding potentials, in my considered view, is Agriculture. Agriculture remains a veritable solution to hunger, inflation, and food Insecurity that ravages the country. No doubt, the Nigeria’s arable landmass is grossly under-utilised and under-exploited.
In recent times, Nigerians have voiced their concerns about the persistent challenges of hunger, inflation, and the general increase in prices of goods and commodities. These issues not only affect the livelihoods of individuals and families but also pose significant threats to food security and economic stability in the country. The United Nations estimated that more than 25 million people in Nigeria could face food insecurity this year—a 47% increase from the 17 million people already at risk of going hungry, mainly due to ongoing insecurity, protracted conflicts, and rising food prices. An estimated two million children under five are likely to be pushed into acute malnutrition. (Reliefweb ,2023). In response, Nigeria declared a state of emergency on food insecurity, recognizing the urgent need to tackle food shortages, stabilize rising prices, and protect farmers facing violence from armed groups. However, without addressing the insecurity challenges, farmers will continue to struggle to feed their families and boost food production.
In addition, parts of northwest and northeast Nigeria have experienced changes in rainfall patterns making less water available for crop production. These climate change events have resulted in droughts and land degradations; presenting challenges for local communities and leading to significant impact on food security. In light of these daunting challenges, it is imperative to address the intricate interplay between insecurity and agricultural productivity. Nigeria can work toward ensuring food security, reducing poverty, and fostering sustainable economic growth in its vital agricultural sector. In this article, I suggest solutions that could enhance agricultural production and ensure that every state scales its agricultural production to a level where it can cater to 60% of the population.
This is feasible and achievable if government at all levels are intentional driving the development of the agricultural sector which was the major economic mainstay of the Country before the crude oil was struck in commercial quantity and consequently became the nation’s monolithic revenue source. Government should revive the moribund Graduate Farmers Scheme and the Rivers State School-to-Land agricultural programmes to operate concurrently with other skills acquisition and development programmes. There should be a consideration for investment in mechanized farming and arable land allocation. State and local governments should play a pivotal role in promoting mechanized farming and providing arable land for farming in communities. Additionally, allocating arable land enables small holder farmers to expand their operations and contribute to food security at the grassroots level.
Nigeria can unlock the potential of its agricultural sector to address the pressing needs of its population and achieve sustainable development. Policymakers and stakeholders must heed Akande’s recommendations and take decisive action to ensure a food-secure future for all Nigerians.
By: Igbiki Benibo
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