Will the coal fires keep burning?

Billions of dollars and many thousands of jobs are at stake as the world ponders the future of one of the main bulk commodities – coal. Coal is the single largest source of energy-related CO2 emissions, and the United Nations has called for the phasing out of coal by 2030 in Organisation for Economic Cooperation and Development countries, which include Australia.The country’s resource minister Keith Pitt responded saying “Australia’s latest export figures showed the reports of coal’s impending death were greatly exaggerated and its future was assured well beyond 2030.“The future of this crucial industry will be decided by the Australian government, not a foreign body that wants to shut it down, costing thousands of jobs and billions of export dollars for our economy,” Pitt added.The International Energy Agency predicts global demand will remain static over the next few years. Growing demand from China and India is likely to offset declines in the United States, the European Union and other regions.In South Africa, some mining companies are already voting with their feet.In May 2021 the shareholders of Anglo American approved the demerger of its South African thermal coal mining business into a new holding company, Thungela Resources. Shares in Thungela listed on the Johannesburg Stock Exchange and London Stock Exchange on June 7, 2021 and continue to trade at a discount to their listing price.Other mining companies have stopped investing in coal and will exit after their mines reach the end of their working lives.This is despite South African export coal prices more than doubling from $56.60 in July 2020 to $122.33 in July 2021. Global sales for coal exports from all countries totalled $82.8 billion in 2020. Worldwide, the value of coal exports has increased by an average 15% for all exporting countries since 2016 when overall coal shipments were valued at $72 billion, according to research conducted by Daniel Workman for “World’s top Exports”.Australia has the most to lose if the world moves away from coal-fired power stations and boilers. It accounts for nearly 40% of total coal exports around the world, with strong growth reported in 2021.A number of countries reported sharp declines in coal exports in 2020. China (down -53.3%) had the biggest drop, followed by Philippines (down -49.8%), Mozambique (down -41.9%), United States (down -37.9%) and Mongolia (down -34.9%).Once heralded as an economic game changer for Mozambique, the country’s biggest coal operation is now up for sale. Both Vale of Brazil and Mitsui of Japan are in the process of disposing of their interests in the giant Moatize Coal mine in Tete province. Rio Tinto took a huge loss in 2014, when it sold its Mozambican Riverside Mining coal assets for $50 million after purchasing the mine for $3.7 billion in 2011.