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.
