September 2022
Despite US economic activity reversing 2020’s drop in coal demand, the fundamental decline in the US coal mining sector has been mainly driven by the fracking revolution that drove down natural gas prices. This factor has significantly reduced the country’s coal-fired generation demand, with over 130GW of coal-fired capacity retired in the last decade.

This lower demand has resulted in coal mine closures. The expansion of natural gas in electricity generation prompted the coal-to-gas switch, while pre-pandemic low gas prices incentivised the retirement of ageing coal-fired power plants in the country.

The United States has pledged to reach net zero by 2050. This target covers all sectors and all greenhouse gases. This will drive the structural decline in the thermal coal industry. The Biden Administration has announced a goal for a carbon-free power system by 2035. This will further prevent any progress in new thermal coal projects or expansions as the country focuses on neutral-carbon developments.

US carbon emissions surged by 6.7% to 4.7Gt in 2021. However, emissions in 2020 had fallen by 10%, as the country responded to the Covid-19 pandemic. Emissions from energy consumption dropped to the lowest level in almost four decades, with the largest decrease on record.

Tighter environmental regulations and pressure on emissions reduction targets have triggered a lack of funding in thermal coal projects. Although the US did not join the pledge to phase out coal at the Glasgow Climate Change Conference, the country’s thermal coal production has been rapidly declining at a CARG of -6.6% over the last ten years.

The US produced 425Mt of steam coal in 2021, up by 9% from the historic low level registered in 2020. In 2021, output remained 20% below the 527Mt produced in 2019. The domestic supply totalled 436Mt in 2021, up by 17% from 2020, but down by 6% from 2019. Exports from the US skyrocketed by 43% to 35Mt in 2021 from 24.5Mt shipped in 2020, very similar to 2019 levels. 

AME forecasts that the US will export 31Mt of thermal coal in 2022, down by 13% from the high level recorded in 2021. The US has been seen as an alternative to Russian energy as a result of post-invasion sanctions.



The country has significantly increased its coal exports to Germany, Italy and the Netherlands. Yet overall US exports will not surge due limited capacity, with logistics and terminal storage space now fully allocated. As seaborne prices fall, higher-cost US output is expected to become less competitive.

US thermal coal exports reached a 13-month high in April, as international buyers sought to restock supplies, and continued rising through the June quarter of 2022. Coal shipment volumes increased 15% on the quarter to 22Mt and climbed 4.6% on the year.

All-time high gas prices and the lack of new project investments have also supported the surge in thermal coal prices. However, rail transportation constraints, weakening demand in China and fears of a global recession pose risks to the sector.

With coal prices hitting record highs, US miners are seeing strong domestic demand and increasing exports to Europe. Peabody Energy remains the leading US coal producer. However, the company has lowered its full year production guidance for seaborne thermal coal by 0.9Mt to 1.2Mt as severe rain and Covid-19 related absenteeism impacted mines’ productivity. The updated seaborn thermal coal guidance for 2022 is expected to be between 14.5Mt and 15Mt.



The Powder River Basin’s (PRB) output for 2022 is expected to be between 73Mt and 82Mt, down from the initial target of 80Mt to 86Mt, due to poor rail performance and uncertainty around improvement to meet current year customer nominations. In the June quarter of 2022, PRB’s sales fell by 10% on the quarter and 18% on the year. AME expects that Peabody will export around 11Mt across all its operations in 2022.

Peabody has pledged to achieve net-zero emissions by 2050. Peabody's first incremental target is to reduce Scope 1 and Scope 2 GHG emissions by 15% by 2026, from its 2018 base. Over the past three years, Peabody has increased renewable energy usage by almost 37%, with nearly 26% of its total energy usage coming from renewable energy sources.

Consol Energy is a US energy company with operations in the Appalachian region. Currently, the company runs the Pennsylvania Mining Complex, located in Greene and Washington counties, which is the largest underground coal mine complex in North America. The coal complex consists of the Bailey, Enlow Fork and Harvey mines, along with the central preparation plant and train loadout facility. 

By February, Consol had sold almost all its forecasted production for 2022. Consol Energy has contracts to deliver over 16Mt of total coal in 2023. The company’s total Scope 1 emissions were 5.74Mt of CO2e, Scope 2 emissions were 0.43Mt of CO2e, and Scope 3 emissions were 53Mt of CO2e.

The miner aims to reduce direct operating GHG emissions by 50% compared to 2019 by the end of 2026 and achieve net-zero operating emissions by 2040, with a current focus on energy management and operational efficiency efforts.



Hallador Energy Company (HNRG) will resume operations at its Freelandville coal mine. Freelandville is an open-cut thermal coal mine in Indiana, US, which has been on care and maintenance since 2016. The company aims to restart mining activities immediately to increase supply to Merom Generation Station.

Merom is a coal-fired thermal power station located in Indiana, with an output power of 1GW. HNRG will finalise taking over Merom in the September quarter of 2022. Merom is expected to consume up to 50% of Sunrise’s coal production.

HNGR acquired Freelandville mining complex from Triad Mining in 2016. The company is also currently running the underground Oaktown Mine 1 and Oaktown Mine 2 in Indiana. HNRG has concluded a sales contract to deliver 6.2Mt in 2022, 4.8Mt in 2023 and a total of 5.7Mt from 2024 to 2027. In addition, HNRG plans to develop Prosperity open-cut coal mine, a new thermal coal mine in the Pike County, Indiana. 

In June 2022, the US Supreme Court ruled to limit the EPA’s ability to regulate carbon emissions from power plants. However, cheaper renewables are decarbonising the US power sector, driving coal out of the electricity market. The ruling is unlikely to impact this trend.

Although the US thermal coal supply market has seen several mines recommencing production since early 2021, these operations will remain profitable only under current high prices and will potentially struggle with productivity in the medium term.