Investments in export-oriented coal mining projects are under consideration in a number of countries. They are at various stages in the development process and here are classified as “more-advanced” and “less-advanced”1.

More-advanced projects under development represent about 93 Mtpa of coal mining capacity, of which about 69% are for metallurgical (met) coal though it is less than 20% of coal demand and around one-third of international trade. Most of the more-advanced projects are in Australia (41%), Russia (22%) or South Africa (19%). Most of the projects in Australia and Russia are for met coal, while most in South Africa are for thermal coal.

The pipeline of more-advanced projects is sufficient to sustain the trend of expanding production capacity seen in recent years. However, disruptions due to the Covid-19 pandemic could have a dampening effect on the implementation of specific projects.

Less-advanced projects under development represent about 819 Mtpa of coal mining capacity, of which about 66% is planned in Australia. This partially reflects that Australia is more transparent than other countries with respect to proposed coal developments, as well as that both its resource base and the legal and regulatory framework are favourable to attract investors and project development companies.

In Annex 2, a non-exhaustive list of coal mining projects in the major exporting countries is attached.

Investments in coal-related infrastructure are commonly linked to coal mining developments. For instance, as Russia proceeds to increase coal production and exports, investments are being made in the related transport infrastructure such as the Elegest-Kyzyl-Kuragino railway line, one of the largest infrastructure projects in modern Russian history. In Australia, the most significant expansion is led by Bravus Mining and Resources (former Adani Mining), an Indian company, and investment plans include a 189 km railway line to connect their Carmichael mine with the existing rail network. In South Africa, Transnet, the rail operator, is well underway to develop rail infrastructure to connect Limpopo and Richards Bay. Feasibility studies to extend this rail line to the Mmamabula Coalfield in Botswana are in progress.

More-advanced coal mining projects focus mainly on coking coal and include 40 Mtpa capacity of met coal and cumulative capacity of 24 Mtpa to produce both met and thermal coal. Even though thermal coal has triple the market size of met coal, met coal projects appear to be favourable to investors. By contrast, thermal coal projects account for 54% of the less-advanced projects.

The stronger investor interest in met coal projects can be attributed to the risk and uncertainties linked to thermal coal projects posed by climate change policies and public opposition. Coal-fired generation has readily available substitutes that have become more economical in recent years and are climate-friendly such as wind and solar PV for power generation. By contrast, substitution of steel production from iron ore at scale without coal is not expected in the near term. This is illustrated in the European Union, which despite its policies to eliminate thermal coal from the energy mix, has included coking coal in its list of critical raw materials. This is also reflected in the behaviour of some companies, like BHP's decision to focus on higher quality coking coal and to sell its 80% stake in Australia's BHP Mitsui Coal joint venture that mines thermal coal. Anglo American has also announced intentions to reduce its exposure to thermal coal, while maintaining coking coal production.

An important caveat to analyse the data above comes from the different visibility of the different exporting countries. Whereas in Australia, where most of met coal projects are located, the list is exhaustive, in other countries projects are more difficult to track.

Several mining projects in Australia recently announced the start of operations. Mach Energy’s Mount Pleasant thermal coal project in New South Wales reached production in late December 2018 just over two years after construction commenced, with the target to reach 10.5 Mtpa of run-of-mine coal. In Queensland, the Bluff PCI coal mine (target of 12 Mtpa) shipped first coal in July 2019. The project is owned by Wealth Mining, a subsidiary of China Kingho Energy Group. Also in Queensland, QCoal's Byerwen Coal Project commenced shipments of met coal in 2019. The opencast mine could reach a production rate of 10 Mtpa met coal in 2021 after significant site expansion.

A third of the world’s more-advanced coal mining projects are located in Australia, mostly in Queensland, with total capacity of 38 Mtpa. Capacity of 27 Mtpa may begin operation by 2021.

Construction of phase 1 (10 Mtpa) of Bravus’s Carmichael thermal coal mine (former Adani Mining) started in June 2019, with first coal to be shipped in 2021. Work on the 189 km rail project to transport coal from the Carmichael mine to the Port of Abbot Point commenced in July 2020. The narrow gauge rail line with a transport capacity of 40 Mtpa will connect the mine to the existing Goonyella rail system. In 2020 Adani launched its own rail business to transport coal to Abbot Point, as rail operators capable of hauling coal from Carmichael mine came under pressure from activists and shareholders. The step increases the upfront capital costs of the project, while Adani avoids being locked into take-or-pay contracts with rail operators.

In September 2020, Pembroke was granted mining leases for the Olive Downs coking coal project, allowing project construction to start. First coal from the AUD 1 billion opencast mine is expected in 2022. The first stage has an expected production rate of 4.5 Mtpa of met coal. Subsequent expansion could increase production to 15 Mtpa. The construction of an 18 km rail spur, connecting the mine to the Norwich Park Branch Railway, is also planned for 2021.

In April 2020, Sojitz Coal Mining and Futura Resources signed an agreement to start production at Futura’s new Wilton coal mine in Queensland. When in full operation the mine together with the adjacent Fairhill mine will have an annual output of around 3 Mtpa of met coal.

Yancoal Australia got approval for their Cameby Downs coal mine expansion in May 2019. The approval allows for an increase in production from 2.8 Mtpa to 3.5 Mtpa of thermal coal as well as for an increase in the lifetime of the mine.

Anglo-American approved the Aquila project in July 2019. The AUD 400 million met coal project extends the life of the Capcoal project by six years to 2028. Anglo-American claims that the Aquila project will be one of the most advanced underground mines in the world. Production is scheduled to start in 2022.

Another project well under way is the expansion of Coronado’s Curragh mine. Production is scheduled to increase by 2 Mtpa by 2023. In the course of the expansion, Coronado also intends to increase the capacity and efficiency of the affiliated coal handling and preparation plant.

In July 2020 the New South Wales Mineral Council published a report on 32 mining projects and their economic impact in the region. Coal mining projects account for 21 of those projects with a projected total investment volume of over AUD 6 billion. The report attributes the realisation of these projects as an important contribution in the post-Covid economic recovery. Of these coal mining projects, the United-Wambo project by Glencore and Peabody is the only one categorised as more-advanced. The 6.5 Mtpa expansion of the thermal and met coal mine with an investment of around AUD 207 million is currently under construction.

As production capacity in Queensland continues to expand, the question of further expansion of the export infrastructure arises. As the majority of development projects are located in Central Queensland the ports on the east coast, i.e. Abbot Point, Gladstone and Hay Point, could become a bottleneck, in particular, if further development of the Galilee Basin occurs, which is far from certain. 

Two new coal mines sold their first coal in 2019 overcoming financial and permit challenges. One was the Exxaro Resources’ Belfast coal mine in Mpumalaga which sold first coal in May 2019. It is a ZAR 3.30 billion project, with an output estimated at 2.7 Mtpa, that includes an opencast mine, handling and preparation plant, and supporting infrastructure and services. The second, also located in Mpumalaga, the Impumelelo underground mine, officially opened in April 2019. With an estimated output of 8.5 Mtpa, Impumelelo was built to replace Sasol Mining’s Brandspruit mine.

South Africa has the third-highest estimated production capacity (16.9 Mtpa) in the more-advanced project category and most are greenfield projects. Mines that have the potential to start operations in 2021 represent about 11.4 Mtpa.

Construction work on Resource Generation’s Boikarabelo project – the largest coal mining project in South Africa – started in April 2013. Completion was scheduled for September 2018, but financial issues have delayed it at least to 2021 with an expected first phase production of 6 Mtpa. A doubling of production levels is foreseen in the long-run, though financial issues are expected to be a challenge.

Transnet’s rail project to connect Limpopo and Mpumalaga could benefit the Boikarabelo project. Transnet plans to increase rail capacity connecting the Waterberg mine in Limpopo to Richards Bay. The first stage of the project was scheduled to increase rail capacity on the line between Lephalale and Ermelo from 3.6 Mtpa to 9.5 Mtpa, with a second phase scheduled to be increased to 13.8 Mtpa. However, it is not clear if and when Boikarabelo will go ahead.

In addition to Exxaro's Grootegeluk and the Boikarabelo projects, coal producers in Botswana hope to export coal via the rail line. Feasibility studies on the connection of the rail line to the Mmamabula Coalfield in Botswana are in progress, lifting the outlook for Botswana’s coal mining sector. Construction could start in 2021 or 2022.

Construction for Phase 1 of MC Mining’s Makhado hard coking and thermal coal project in the Soutpansberg coalfield in the Limpopo province could start in 2021. MC Mining concluded a coal purchase agreement for 0.4 Mtpa of hard coking coal with Huadong Coal Trading Centre, a Chinese state-owned enterprise, in 2018. MC Mining also concluded an offtake agreement for at least 0.35 Mtpa with steelmaker ArcelorMittal South Africa in July 2019.

Russia aims to expand domestic coal production to 448-530 Mtpa by 2024 and 485-668 Mtpa by 2035, while doubling coal exports during this period. These objectives were adopted in June 2020 as part of Russia’s Energy Strategy to 2035. At least 20.3 Mtpa of capacity expansions are categorised as more-advanced. Most of these projects are expected to produce coking coal.

This focus on exports requires expanded rail and coal export terminal facilities. A number of investments in both railway and port infrastructure have been announced in recent years.

A particularly ambitious project is the construction of a rail connection between Tuva, a Siberian Republic bordering Mongolia, and the rail network of the rest of the country. The connection would allow for the development of the coal deposits of the Ulug-Khemsky Basin located in the Tuva Republic. First trains on the 410 km Elegest-Kyzyl-Kuragino railway line are planned for 2023. Cargo transport capacity of 14 Mtpa is planned for the first phase, which could be expanded to 27 Mtpa. Costs for the rail development are estimated to be about RU 126 billion.

Several port expansion projects were completed in 2019. The new Taman port shipped first coal, becoming one of the largest thermal coal export hubs in the Black Sea. The port has a capacity of 20 Mtpa and can handle Capesize vessels. Exports from Taman port are mainly destined for Turkey. A third export line at Russia’s largest coal terminal at Vostochny port in the Far East region was opened in September 2019, which doubles the terminal’s loading capacity to 50-55 Mtpa.

The transport capacities of several other ports are planned to be expanded in the coming years. At Port Dickson in the Krasnoyarsk Territory the construction of a coal terminal for shipping coal from the field near the Lemberova River is planned as well as a terminal for shipping coal from the Syradasaisk coal field. SUEK, Russia’s largest coal miner, is expanding the port of Vanino in Russia’s Far East region, increasing capacity by 80% to 40 Mtpa. Tigers Realm Coal aims to expand its Beringovsky Port, located northeast of the Amaam North coal deposit and their Amaam North Project F mine.

The Lavna coal terminal project in Kola Bay, near Murmansk, has been delayed. The viability of the project is uncertain, particularly given the weakness of the European coal import market. 

Mongolia aims to expand its coal export capacity by around 27 Mtpa. The plans are for met coal only and mostly at Tavan Tolgoi, the world’s largest untapped coking coal deposits, with estimated reserves of 7.4 billion tonnes.

Authorities in Mongolia approved plans in 2018 to sell up to 30% of the state-owned Tavan Tolgoi mine in a proposed initial public offering, which aimed to raise USD 1 billion. Plans for the IPO were shelved in April 2020 as the Covid pandemic disrupted global financial markets. The IPO launch would have been the third attempt to raise money to develop the mine. Therefore, if and when it may be developed is uncertain.

The Tavan Tolgoi mine location is in proximity to the border with China. So development of the mine would crucially require expansion of railway capacity to reach Chinese markets. To this end, Mongolia is taking steps to complete a rail line from the Tavan Tolgoi mine to the border town of Zuunbayarn by the end of 2021. The 415 km rail link is intended to carry up to 30 Mtpa of coal from Tavan Tolgoi to China. Construction began in May 2019 and the first 50 km was completed in August 2020. In China, the rail link will connect to the Ganquan railway to deliver coal to Chinese ports via Shenhua rail lines. Over the long term, developing the mine and the transport infrastructure could increase competition for Australia’s dominance in China’s import coking coal market.

Russia’s 410 km Elegest-Kyzyl-Kuragino railway that is being developed has the potential to be extended to the border with Mongolia. This could open access for Mongolian coal to Asia Pacific markets.

Mongolia is co-operating with Russia to build a 10 Mtpa coal terminal at Zarubina in Primorsky Krai, Posyet Bay. The greenfield project is a joint venture between FESCO Transportation Group, Russia’s largest intermodal transport operator, and Erdenes Tavan Tolgoi (Mongolia’s coking coal mining company). The main aim of the development is to handle transport flows of Mongolian coal to countries in the Asia Pacific region. The port is planned to begin operations in 2023.

United States

All of the current projects classified as more-advanced are for metallurgical coal and represent 5.6 Mtpa of new capacity.

Arch Resources announced in 2019 that it will spend USD 220 million, mostly with its own funding, on its new Leer South coking coal mine. The mine, which will produce an estimated 3 Mtpa of coking coal, will be similar to Arch Coal’s existing Leer longwall mine. Production is set to start in 2021.

Canada

Current development projects in Canada mostly focus on the production of coking coal. The only one classified as more-advanced is the Crown Mountain project in British Columbia. Owned by Jameson Resources, first coal at the 1.7 Mtpa coking coal mine is expected in 2023.

In June 2020, the Province of Alberta loosened restrictions on opencast coal mining to boost its economy which was hit hard by the Covid-19 pandemic and the associated decline in oil prices. The approach could stimulate activity to develop, such as Riverdale Resources’ Grassy Mountain project.

Europe

In line with the consideration of coking coal as a critical raw material by the European Union, some small coking coal mining projects are under development, although under challenging conditions.

In the United Kingdom, most coal mines closed in recent years. But there are plans for some new mines, particularly to produce met coal for the steel industry, as well as for export. The Woodhouse Colliery project would be the first new deep coal mine project in the United Kingdom for 30 years. Developers aim for the 3.1 Mtpa coking coal mine to produce first coal in 2022. Other less-advanced projects include: Bank Mining’s Highthorn surface mine (3 Mtpa); New Age Exploration’s Lochinvar project (1.4 Mtpa); and West Cumbrian Mining’s coking coal project in Cumbria (2.1 Mtpa).

Poland

The Polish state-run coal mining company, Jastrzębska Spółka Węglowa, started operations at Bzie-Debina 1-Zachód in September 2019 – Poland’s first new coal mine in 25 years. Production at the coking coal mine is scheduled to start in 2022. Prairie Mining Limited proposes to develop additionally the Jan Karski coking coal mine with an estimated capacity of 6.3 Mtpa.

Colombia

Reduced demand in the Atlantic Basin coal market suppresses plans to expand mining capacity in Colombia. The few proposals are categorised as less-advanced. Of the projects discussed by the companies, Drummond, El Cerrejón and Prodeco, the most likely to expand production would be Drummond. The less-advanced Cerrejón P40 expansion project seems to have been shelved.

Indonesia

Thermal coal is the focus of proposed coal mining projects in Indonesia, most of which are categorised as less-advanced. Lack of transparency in most Indonesian projects makes comparison with other countries difficult.

The only more-advanced coal project in Indonesia is Cokal’s Bumi Barito Mineral project. Cokal announced tenders in February 2020 for project development. In November 2020 Cokal contracted PT Harmoni Panca Utama to provide mining services at the 2 Mtpa coking coal and PCI project.

Mozambique

All coal mine development projects in Mozambique are categorised as less-advanced.

Significant projects include the expansion of the Benga Mine in several stages to 15 Mtpa and the adjacent Zambeze Mine with a target production capacity of 12 Mtpa. Both projects are owned by the Indian consortium ICVL, which bought the mine projects from Rio Tinto in 2014.