New South Wales Treasurer Matt Kean will unveil requirements that force coal companies to reserve 10 per cent of their output exclusively for domestic use.
The requirements are being put in place to ensure the state has enough coal to fire its power stations.
Currently, some miners are forced to set aside coal for the state’s energy needs while others are not, with Kean saying this new requirement will help to even up this imbalance.
It is expected that orders requiring companies to provide between seven and 10 per cent of their output for domestic supply will be issued at the end of this month.
“This coal cap scheme will see NSW doing our part at the request of the Albanese government to contribute to the national solution of this national problem,” Kean said.
“I know those currently providing coal for the local market will appreciate that companies enjoying super profits on the back of the war in Ukraine will now do their part for the domestic market. Of course they should provide Australian production for Australian consumers.
“These new arrangements will help even the playing field among coal producers.”
NSW coal mines run by BHP, Whitehaven and all other miners will be brought under the scheme, which originally required only 12 NSW mines to reserve a portion of their coal for domestic power generators and prevented them from charging more than $125 a tonne for intermediate grade coal.
BHP and Whitehaven have sold virtually all of their coal to exclusively foreign buyers in recent years.
Whitehaven said it was “reviewing the potential implications of an expanded scheme and will continue to engage with the NSW Government and update the market as appropriate”.
A Glencore spokesperson said the NSW Government needs to better explain how the coal price cap would flow through to household power bills.
“We believe the focus should be on the shortfall of thermal coal supply required by NSW power stations,” the spokesperson said.
Sources close to the NSW Government have reportedly emphasised the policy’s intent is to bring equity for the state’s coal requirements to the industry, rather than seeing a small group of companies shoulder the burden for keeping the lights on locally at a time when international coal demand is soaring.