COAL, in theory, is among the simplest of products. You dig it up and burn it to make heat.
And yet the economics of this apparently simple commodity are surprisingly complex, as Hunter residents often have reason to observe.
There are different types of coal, for a start. Indeed, apart from the obvious distinction between coking and steaming coals, the various gradations of energy content, ash, sulphur and other impurities have kept chemists, physicists and engineers busy for many years.
Different kinds of coal have different uses and different prices, and demand for all of them rises and falls with global market conditions and changes in industry and technology.
Many decades ago, for example, Hunter coal was keenly sought to power steamships and railways and to make gas for urban consumption.
The onset of the oil age and the development of big power grids changed that, with new markets emerging as thermal power stations evolved into the coal-hungry giants that still characterise most of the world’s energy production.
Then, domestic power generation absorbed much of the region’s coal production until the big export booms hit in the latter decades of the 20th century. During this period the industry moved from being labour-intensive and mostly underground to capital intensive and mostly open-cut.
Over the years the industry in the Hunter has experienced its booms and busts, as well as considerable periods of so-called “profitless prosperity”.
But when Asia began its economic rise in earnest, the Hunter’s proximity to the big energy markets represented an opportunity of historic proportions.
The scale of the boom that followed is well understood in the region, with extraordinary sums invested in the race between resource owners to dig, sell and ship while prices stayed high.
Now the boom has eased. Prices are down, jobs are being shed and investment has slowed. But record tonnages are still being shipped as producers switch their focus to cost-containment.
History and economics might predict a move by owners to shift production from higher-cost to lower-cost mines, preserving profits by shifting greater volumes at a lower unit price.
Whether this means that deep mines in the Hunter fall by the wayside in favour of newer, and more shallow coal deposits further west, remains to be seen.
In any case, Newcastle will still ship coal for many years to come.