Bond investors and new Queensland thermal coal mines

3 minute read

With Queensland’s (QLD) decisions to ramp up thermal coal mining, we review the status of Queensland Treasury Corporation (QTC) grey and green-labelled bonds, as well as the key investors.

QLD's recent actions on reopening coal mines matter: QLD-based Galilee (11.4bn tonnes EDR) and Bowen (26.9bn tonnes EDR) basins have economically recoverable coal that - if incinerated - is equivalent to around 25% of the remaining global carbon budget to contain global warming to 1.5C.

With the news that QLD has opted to take a thermal coal mine out of mothballed status as well as other projects, we review the investor base in QLD’s bonds. QTC bonds trade flat or even expensive to the AUD state curves and green-labelled QTCs are trading inside the grey curve, whilst a relatively small share of QTC green-labelled bonds is owned by ESG investors; one possible interpretation is that the market does not consider them green. The concentration in coal-intensive QLD bonds among Australian state bonds is surprising giving a high focus on systematic, highly diversified strategies.