July 2021
Investment in metallurgical coal mining projects is heavily focused on the world’s top five producers. These export-oriented developments comprise nearly 64Mtpa of coal mining capacity. These ventures have been approved and have obtained final investment decision or are already under construction, with the majority located in Australia and Russia.

New development projects continue the global trends in coal production over the last three years. In 2019, world’s metallurgical coal production increased about 3.10% y-o-y driven by new developments in China, Australia, and Russia. Although the Covid-19 pandemic crisis decreased global production levels in 2020, it did not severely affect the pace of mine approvals or construction in the mentioned countries.

Strong conditions in the global steel market have boosted the global metallurgical coal trade in 2021. China’s informal imports ban on Australian coal have significantly shifted the market flow and encouraged updates in 2021 production guidance. US exports recover as the country gets participation in the Chinese market, Russian exports are supported by new infrastructure, and Canadian exporters benefit from substituting Australian production with Chinese traders.

AME estimates global metallurgical coal exports in 2021 to rise approximately 12.3% y-o-y. At the national level, most increase in supply will come from Australia (29Mt), Mongolia (18Mt), United States (9.5Mt), and Russia (9.2Mt) according to AME’s globally export met coal supply 2025 forecast.



Focus on Investments in Export Market

Advanced projects appear to be adequate to support the trend of expanding capacity. However, projects that are waiting for approval at environmental or feasibility assessment stage represent 819Mtpa of total coal mining capacity. Australia accounts for 66% of this planning reflecting more suitable conditions to attract project development companies and investors. Coking coal mining accounts for 46% of these projects at early stage.

Advanced coal projects emphasize principally on coking coal representing 69% of total coal mining planning. Although metallurgical coal demand accounts for less than 20% of total coal demand, it clearly has stronger investor interest considering how climate change policies and strong public opposition generates uncertainty around the future of thermal coal projects. The strong global forecast in steel production, which translates into high coking coal demand, has impacted the behaviour of top companies that are divesting from their thermal coal assets and focusing on higher quality coking coal production. The demerger of Anglo American’s South African and Colombian thermal coal assets and the exit of BHP from the one of the world’s largest surface mining operations while maintaining met coal production reflects investors interests.


Olive Downs Coking Coal Complex, Australia

Pembroke Resources is developing the Olive Downs Coking Coal Project located in the Bowen Basin about 40Km south-west of Moranbah, Anglo American’s hard coking coal flagship mine. The project is a proposed open cut mine targeting to produce near 15Mtpa. Olive Downs will produce semi hard coking coal and PCI over an 80-year life expectancy with the aim to export to key markets including Japan, South Korea, and India. Key features of the project involve coal handling and preparation plant, 18Km rail spur and onsite rail loop, raw water pipeline, private access roads, electricity transmission line and wastewater and sewage treatment plants.

The projects application was submitted on the 20th of January 2017, held public consultation in September 2018, and got approved subject to conditions in May 2020 by the Commonwealth Minister for the Environment. Although the project has been widely criticized by the general public as conservation groups affirm the mine could endanger koala habitats to extinction, the Australian Federal Government will loan approximately $175m, which will contribute to the first stage development of the mine. Australia is expected to benefit in about $10b over the mine’s lifetime.


Grassy Mountain Coal Project, Canada

Riversdale Resources is developing the Grassy Mountain Coal Project near the Crowsnest Pass in south-west Alberta, Canada. The project is a proposed open-pit metallurgical coal mine with a 4.5Mtpa production capacity. Riverdale plans to construct and operate the mine through its wholly owned subsidiary Benga Mining over a mine-life of 25 years.

High quality metallurgical coal from the Grassy Mountain will be railed to marine terminal facilities on British Columbia’s west coast and shipped to customers in the Asian market. Production is intended to be developed in two stages. First stage to produce 2Mt for the first year, with the second stage to add another 2Mt in capacity.

The capital expenditure for the project is approximately US$800m and it is expected to generate about US$1.7bn in provincial and federal income taxes and royalties. The company submitted the project proposal in August 2016 and has undergone extensive federal and environmental assessment reviews. In June, Grassy Mountain faced a setback as the Joint Federal-Provincial Review Panel recommended to stop the project.

Significant environmental effects on surface water quality and adverse impact on physical and cultural heritage of First Nations are among the reasons to prevent the development. The panel questioned the ability of the miner to control the release of selenium from the mining operations. The outcome of Benga’s application under the Coal Conservation Act is not unexpected considering the current socio-political situation in the province of Alberta, where the government came under fire for silently removing the land-protection policy in mining. Now, the policy has been reinstated and the public will be invited for consultation.


Amaam Coking Coal Project, Russia

Russian Tiger Real Coal (TGI) mining company is developing the Amaam Coal Project, located in the Beringovsky Basin, Russia Far East.  The strategy is to supply up to 10Mtpa of coking coal to the seaborne market. The key advantage of the project includes low stripping ratio, short overland transport, TIG owned port, and low operating costs estimate. The company holds 100% interest in the project.

The project consists of three phases. Phase one has already started and involves production of +1Mtpa of semi-hard coking coal shipped from the company owned Beringovsky Port. Phase two, ramp up production at Amaam North (Project F), and phase three, develop Amaan to full capacity together with the establishment of a transportation corridor to a year-round port at Arinay Lagoon.

On the other hand, development of other new metallurgical coal projects in the Amur Region, Russia has increased attention in the Vera coal terminal project. Vera project aims to build a large-scale coal terminal with shipping facilities for up to 20Mtpa for exports in the Primorsky Krai coastal area with operations are scheduled to begin in 2022.

Ogodginskoe mining project will produce metallurgical coal that will be exported to Asia focusing on China and Japan. Production is expected to commence in late 2021 aiming to reach 12Mtpa in 2022 and 20Mtpa in following years, matching the capacity of the terminal.