In terms of demand, in the past China has been one of the main consumers of Australian coal. However, as Coal Investing News reported last month, China has introduced a "control coal" policy aimed at reducing pollution by curbing its coal consumption. Its goal is to limit its annual coal use to 4 billion MT by 2015 or 2016.

Parkinson's article highlights that point, noting that China's "major ports are currently overstocked with [coal] imports that are not required because of a fall in demand, which in turn has caused the closure of half of its mines in some regions." The country simply does not need Australia's product as much as it did in the past.

The issue of demand is highlighted by statements made by Yancoal at its annual meeting. While according to Platts, the company's CEO, Peter Barton, told investors that "forecast production growth from Australia" means that "prices are expected to remain under pressure," he also noted that the company plans to increase its output by 70 percent, to 24 million MT per year, by 2017.

His statement shows that though some companies are lowering their output, others are not, meaning that Australia is failing to adequately curb its coal output even as the fuel has nowhere to go.

GVK and Adani push forward

Despite these circumstances, GVK Group and Adani Enterprises (BSE:512599), India's largest importer of coal for power stations, are forging ahead with a "$21 billion bet" on Queensland's Galilee Basin, which covers over 247,000 square kilometers and is estimated to contain 14 billion MT of coal, Bloomberg reported. As GVK moves forward with both its Carmichael and Alpha mines, the latter of which is expected to begin exports by 2017, Adani is set to begin construction this year on its Carmichael mine, whose first output is slated for 2016.