Global coal output is estimated to have declined by 2 per cent in 2020 due to COVID-19-related lockdowns and restrictions, with significant reductions observed in the U.S. (23.6 per cent), Indonesia (13.1 per cent), Russia (8.1 per cent) and Australia (5.5 per cent). These were only partially offset by increases in China (4 per cent) and India (0.7 per cent). Additionally, during the last year, there was an estimated 3.5 per cent reduction in the global thermal coal demand, while the world’s metallurgical coal demand fell by 5.9 per cent. However, global coal production is set to recover by 3.5 per cent to 8 billion tonnes (bnt) in 2021, according to GlobalData.
With the U.S. coal industry already challenged by high production costs and low natural gas prices, the country’s output was severely impacted by the COVID-19 pandemic, with key companies halting their operations as part of preventive measures.
Additionally, a decline in domestic demand as well as export market demand affected output from Indonesia and Russia.
Global coal production is expected to grow at a compound annual growth rate (CAGR) of 2.3 per cent between 2021 and 2025 to reach 8.8 bnt in 2025.
While thermal coal production is expected to have a relatively marginal 2 per cent CAGR to reach 7,549.6 million tonnes (Mt), metallurgical coal is forecast to register stronger growth of 4.2 per cent per year, to reach 1,216.9 Mt in 2025.
Associate Project Manager at GlobalData, Vinneth Bajaj, said India will be the largest contributor to this growth, with its production expected to increase from 777.7 Mt in 2020 to 1.2 bnt in 2025.
“This will be followed by China, Indonesia, Australia and South Africa, whose combined production is expected to increase from an estimated 5 bnt in 2021 to 5.43 bnt in 2025.”
“Other countries that are anticipated to bounce back strongly during 2021 include the US (9.3 per cent) and Russia (8.4 per cent). In contrast, production from Australia is expected to decline by around 4 per cent in 2021, mainly because of concerns over the future of China-Australia trade,” Bajaj commented.
Looking ahead, 2.5 per cent growth is expected in China in 2021, supported by the commencement of projects including Dahaize and Xinjiang Zhundongs.
In addition, India, which, after flagging coal as an essential commodity, reported 0.7 per cent growth in 2020, is expected to deliver 9 per cent growth in output to reach 827.8 Mt in 2021.
The commercial auction of coal mines in India is expected to be a key production booster for the world’s second-largest coal producer.
In early 2020, the Indian Government gave clearance to begin operations for 10 coal projects that included Kusmunda (62.5 Mt at full capacity) in Chhattisgarh, and Rajmahal (24 Mt) and Lakhanpur (21 Mt) in Jharkhand.