Activity is really starting to heat up in the coal business. The news leads with Stanmore Resources acquiring BHP’s stake in several metallurgical assets in Queensland, Australia. Stanmore expressed its excitement about building on its portfolio in the region. The business press was painting another picture to fit its narrative. Several stories claimed BHP was bowing to stakeholder pressure and exiting the coal business. They overlooked the fact that the BHP Mitsubishi Alliance is still Australia’s largest supplier of seaborne metallurgical coal with seven Bowen Basin mines and the Hay Point Coal Terminal.
Coal operators in the U.S. received an early Christmas gift. Demand for coal (thermal and met) is outstripping supply and prices for prompt deliveries have increased dramatically. Spot prices for Powder River Basin coals have more than doubled. Stockpiles at utilities have dwindled to a 24-year low and most U.S. coal operators are saying they are sold out for 2022. Coal sales for 2023 are well under way. Coal operators with excess capacity will be reaping the rewards of a tight market.
The 26th U.N. Climate Change Conference (COP26) concluded on November 12. Depending on who you believe, they either accomplished a lot or nothing. A total of 46 countries signed a Global Coal to Clean Power Transition Statement, which cited coal-fired power generation as the “biggest cause” of global temperature increases. The signatories committed themselves to scaling up clean power to accelerate a transition away from coal by 2030. Only three of the signatories generate a significant amount of power from coal: Canada, Indonesia and Poland. The conversion of Canadian power plants and the closure of captive Canadian thermal mines has been well documented. Indonesia’s signature contains a footnote saying it will consider it by 2040 with assistance from other countries. Poland also clarified its position (see World News, p. 13). The three largest coal consumers, China, India and the USA, did not sign the statement.
What caused the most debate at the conclusion of COP26 was the softening of the stance on coal from phase out to phase down. In an op-ed, Is the End of Coal in Sight? Wood Mackenzie Vice Chair of Metals and Mining Julian Kettle wrote: “The uncomfortable truth is that while coal is an unwelcome guest at the decarbonization table, we will still need coal-fired power to ensure an orderly transition to a low carbon world.” Explaining the commitment to phase down coal is somewhat nebulous, he outlined what different temperature reduction pathways would mean for thermal coal demand, ultimately surmising that a significant reduction in coal use would be incredibly difficult in an increasingly electrified world.
As this edition was going to press, a mine fire at the Listvyazhnaya underground coal mine in Siberia claimed the lives of 52 miners (see World News, p. 8). Our hearts and prayers are with the families and friends of those miners. No measure of coal is worth a man’s life.
