Column: Coal optimism in Australia hides unease about long-term problems FacebookTwitterLinkedInEmailPrint分享Reuters:BRISBANE—Coal miners supplying Asia’s rapidly growing economies have plenty to be optimistic about as prices and demand appear robust, but they should be wary of getting caught up in the positive feedback loop that nearly destroyed them before.This week’s inaugural Energy Mines and Money conference in Brisbane, the heartland of the industry in top coal exporter Australia, was a sea of optimism about the outlook for the industry. Prices have been on an upward trend since bottoming in 2016 after five years of losses, and miners are once again making good profits amid strong demand from top importers China and India, new consumers such as Pakistan and the reliable veteran buyers like Japan and South Korea.But at the back of the minds of many Australian miners is the fear that they have seen this movie before, and they don’t want the same ending. In 2012, the industry was cock-a-hoop over forecasts that pointed to massive import demand growth in Asia, led by China and India. Problem was it was pretty much all wrong.A well-respected industry consultant and forecaster boldly claimed in early 2012 that China would be importing 1 billion tonnes of coal by 2030, and India would be up to 400 million tonnes. But these forecasts now look hopelessly optimistic, given China’s coal imports were 270.9 million tonnes in 2017. While imports have risen for two years, they are still well below the record 327.2 million tonnes from 2013. While China’s coal imports may rise slightly this year, it’s unlikely they will reach 300 million tonnes, and that 1 billion tonne forecast looks well out of reach.The [new] optimistic forecasts also fail to account for political pressure to move away from coal, not only in China, but increasingly in India. It’s likely that those countries planning on building coal plants powered by imports will also come under mounting pressure from environmental activists, who have become increasingly sophisticated in targeting how coal plants are financed and insured.In fact, if there was another common theme to this week’s conference in Brisbane, it’s that the coal sector still doesn’t fully grasp that array of forces now being deployed against it. The mantra of coal as ‘cheap and reliable and the only way to electrify the masses of people still without power’ was still repeated, and clearly believed.But scratch a little further and miners will tell you of the incredible difficulties in developing projects, with increased government scrutiny and regulation, the rising threat of public opposition and the dearth of financing, notwithstanding a seemingly large pool of investment funds. The inability of India’s Adani to actually start building its Carmichael mine in Queensland, the world’s largest planned mine aimed at supplying the seaborne market, plays on the industry’s mind, as does the virulent public opposition to the mine’s development.More: COLUMN-Resurgent coal exporters should be wary of blinkered optimism: Russell
“Historically there has been 80-100 new mandates a year and we would expect that to continue into the future,” he said. “On top of that you have the retenders, and estimates are somewhere in the region of 400. When you bring those together you have about 160 mandates coming to market every year for the next five years.”According to KPMG’s 2019 survey of the UK fiduciary market, there were 946 mandates in total with £172bn (€202bn) in combined assets, marking an 83% increase in mandates and 139% increase in assets in the past five years.It has been almost a year since the Competition and Markets Authority (CMA), the UK’s competition watchdog, called for mandatory tendering of fiduciary mandates as one of its “remedies” for the investment consulting and fiduciary management industries to boost competition. Since then, some of the country’s biggest providers of fiduciary services have been hiring new staff to prepare for the requirements.Preparing for busy timesCompanies including Barnett Waddingham, BlackRock, LCP, Mercer, MJ Hudson, SEI and Willis Towers Watson have all added resources in the past 12-18 months, they confirmed to IPE.Peter Daniels, head of Barnett Waddingham’s FM Evaluate service, said his company expected “quite a large pickup in demand over 2020-21 and subsequent years”.“There are hundreds of mandates which are captured by this mandatory requirement,” he said. “Over the last month or so we’ve seen that start to pick up but we haven’t seen the full extent of work coming to market yet.“We are making sure that we have enough people to be able to advise clients, but also we are developing our services so that they can be delivered in a way that can easily respond to the pickup in demand.”Steady growth in UK fiduciary market Chart MakerBen Gunnee, UK head of fiduciary management at Mercer, said trustees had “a large degree of flexibility” regarding how to implement tenders, from a full market review to a desktop exercise.“Trustees need to understand the options and undertake an exercise that best suits their needs,” he said. “Overall, we expect it will be a very busy time for trustees and fiduciary management providers during 2020 and 2021.”Tim Giles, EMEA managing director of investment at Aon, said: “We have had plenty of time to gear up fully for what may be a significant increase… We have the resources in place to maintain our focus on existing clients while also making the most of the new opportunities that are likely to emerge.”For some firms, more rigorous tenders have already started. André Kerr, head of fiduciary management oversight at XPS Pensions Group, said the listed consultancy had already started helping clients through retenders and had introduced a “streamlined” process that allowed existing fiduciary manager clients to comply efficiently with the new rules.Last week, The Pensions Regulator (TPR) published a detailed guide for trustees, detailing the requirements. Tenders must include at least three independent providers, but TPR said more would likely be “prudent”. Trustees must also fully document the tender process.TPR also indicated it would provide further guidance on how to assess fiduciary manager performance once the proposed industry standard had been approved by the CMA.CFA Institute has acquired the intellectual property rights to the voluntary fiduciary management performance standard developed by IC Select and TPR said it was proposing to submit the revised standard to the CMA for approval by 10 December. Providers have been hiring staff and recalibrating services to prepare for mandatory tendering rules that come into force on 10 DecemberUK pension consultants and fiduciary managers have been scaling up resources to cope with an expected large increase in the number of new mandates coming to market from next year.From 10 December 2019, UK pension schemes must run a formal tender process for any fiduciary mandate that exceeds 20% of scheme assets. For those that have already outsourced investment functions to a fiduciary, this must be retendered within five years.This is expected to put a greater burden on providers, according to Sion Cole, head of UK fiduciary business at BlackRock.
Former Leicester striker Gary Lineker, now host of BBC show Match of the Day, saw the early reports and thought Pearson was on his way out. Lineker wrote on Twitter: “Not overly surprised that Nigel Pearson has been fired by Leicester, given they’re bottom, but he’s been a very good manager of the club. “Not sure if yesterday’s bizarre touchline behaviour had anything to do with Pearson’s exit, but certainly shows how the job gets to ’em all.” However forecasts of Pearson’s demise proved inaccurate, and on he continues in his job. Pearson began his second spell as Leicester manager in November 2011, less than 18 months after departing for Hull. His side amassed 102 points last season as they dominated the Championship, but the step up to the top flight has been difficult. A stirring 5-3 home win over Manchester United in September augured well for their prospects, but it was followed by a distinctly lean spell and Leicester’s next victory did not arrive until Pearson’s charges faced his old side Hull on December 28. A draw against Liverpool and win over Aston Villa followed, but successive defeats by Stoke, Manchester United and Palace cast new doubt over their survival chances. Leicester presently stand four points adrift of 17th-placed Burnley, the last team in a safe position. Pearson is due to hold a routine press conference on Monday afternoon ahead of the Emirates Stadium match. Pearson, speaking before the conjecture over his future began, stressed he has every confidence he is going about his job the right way. “My job and the way I operate is exactly the same as last year, and the year before and the year before that,” said Pearson. “I am a part of a process at the football club, and we are trying to turn the club into a competitive Premier League side, which has been going on since I returned to the club just over three years ago. “As far as I’m concerned I am the same person whether we win, lose or draw.” McArthur, meanwhile, has played down what unfolded with Pearson. Pearson launched a critical attack on McArthur’s old club Wigan and former manager Uwe Rosler after failing to sign him last summer as bids of £5million and £7million were rejected. McArthur, who eventually moved to Palace for £7million, said via Sport Lobster: “Situation with me and Nigel Pearson is getting blown out of proportion.” Leicester have denied manager Nigel Pearson has been sacked by the club. Pearson led the Foxes to the Championship title last season, but his team have picked up just 17 points from their opening 24 matches of the current Barclays Premier League campaign and sit at the foot of the table. Following reports of Pearson being dismissed earlier in the day, Leicester issued a statement to say he remained in charge. Press Association The statement, published on the club’s official website, read: ” Leicester City Football Club would like to clarify its position relative to its manager, Nigel Pearson. “Contrary to media speculation on Sunday evening, Nigel remains the club’s first team manager. Reports to the contrary are inaccurate and without foundation. “Nigel, his staff and the first team squad are entirely focused on Tuesday night’s trip to Arsenal and our continued efforts to secure our position in the Barclays Premier League.” For several hours on Sunday, Pearson’s future at the club looked to be in doubt, but Leicester’s late-night statement put a halt to talk that he had left. The 51-year-old former Southampton and Hull boss was involved in a bizarre incident in Saturday’s 1-0 home defeat by Crystal Palace. He was knocked over on the touchline by Palace midfielder James McArthur after a tackle by Marc Albrighton, resulting in what was initially a friendly exchange between the Foxes boss and Scottish player. Pearson even playfully grabbed McArthur around the throat before helping him to his feet, only to then prevent him from returning to the pitch by grabbing hold of his shirt. That may not have reflected well on Pearson, but there is a lot of goodwill at the club for the man who brought them back to the top flight.