Australian coal producers’ earnings are on the way up as emerging markets decide to live with the virus and begin to demand more energy, one of many factors sending coal prices higher.

Russia’s war in Ukraine — a more recent factor — is now expected to steepen coal’s ascent, according to some analysts.

Demand is so high, a representative of an Australian coal producer said, that “Australian coal is already sold out.”

Yancoal Australia, a subsidiary of China’s Yanzhou Coal Mining, reported a net profit of A$791 million ($591.8 million) for fiscal year 2021, an improvement from the previous year’s net loss of A$1.04 billion. The company’s sales of A$5.4 billion were up 55%.

Whitehaven Coal’s sales doubled to A$1.4 billion in the July-December period from a year earlier. The company logged a net profit of A$340 million for the same half, versus a net loss of A$94 million a year earlier.

The biggest factor pushing up sales results at Yancoal and Whitehaven is rising coal prices.

“Coal prices rallied through 2021, peaking in October,” Yancoal’s David Moult said. “Supply constraints in the international coal market and the broader energy markets continue to underpin high commodity prices, which are likely to persist through the coming months.”

Whitehaven Coal’s price for thermal coal was A$146 per metric ton (mt) in the July-December period, nearly triple the A$55/mt of a year earlier. Its price for coking coal, used by steelmakers, nearly doubled, to A$155/mt.

As for Yancoal, its thermal coal price jumped 76% to A$134 per ton in fiscal year 2021.

The spot price for Australian thermal coal briefly topped A$250/mt in October.

This year, Russia’s war in Ukraine has kept prices at record highs. Russia is the world’s third-largest exporter of thermal coal, behind Indonesia and Australia, and its military attack on a neighbor has invited global sanctions.

A Whitehaven representative said, “Given that current spot prices have risen significantly, and we expect our sales volumes to be 20% greater than the first half, then the second half should be much improved over the record first half.”

Much better earnings are expected in the fiscal year ending in June.

In 2020, Indonesia accounted for 42% of the world’s total thermal coal exports, according to a report compiled by the Australian government. 

Indonesia was followed by Australia at 21% and Russia at 18%. If supplies from Russia decrease, coal could become even more expensive. 

In Australia, thermal coal output in the October-December quarter decreased from that of a year earlier due to bad weather. The country’s supply-demand balance has also tightened because of Indonesia’s export controls.

About 70% of Russia’s thermal coal exports go to Europe. South Korea and Japan also buy coal from Russia.

“Some buyers in Japan and Europe have already indicated they are looking to replace Russian supply, and non-Russian thermal coal in Europe is attracting a significant premium over Russian material,” said Rory Simington, principal analyst at U.K.-based energy research company Wood Mackenzie.