While coking coal prices have come down to $375/t FOB Australia, these are still higher against pre-Covid levels of $100/t amid increased demand from European and Asian markets, which has motivated Australian miners to either go for expansion or restart exports of certain grades from existing mines.
It may be recalled, coking coal prices have been volatile since late 2021 due to bad weather conditions, spurt in demand in the first quarter of 2022 and then the Russia-Ukraine conflict.
In fact, in mid-March, prices of Australian premium HCC grade coking coal surged to $660/t FOB amid panic buying by global steel mills with sanctions announcement by western countries.
To cash in on the heightened demand and prices, according to reports, Australia plans to produce additional 8.4 mnt of coking coal by 2022 and up to 14 mnt by 2023.
Expansion plans
To begin with, major miner Bowen Coking Coal Ltd (BCC) has restarted shipping of PCI coal from its Bluff mine to Gladstone Port for exports this month. The open-cut PCI coal mine was on care and maintenance since December 2020.
Bluff produces ultra-low volatile PCI coal, which is well known for its low ash and high energy content, and high coke replacement ratio.
The company plans to mine 5 mnt of additional coal annually by 2024. This includes the Burton and Lenton coking coal projects being acquired from the New Hope Coal Mine in Australia.
In May, BCC also began mobilizing a contract mining team at the 1.2-mnt Broadmeadow East Mine annually, with plans to mine 600,000 t by 2022, with the first coal being sent to the Carborough Downs processing plant by July.
Another miner, Fitzroy, that bought Carborough Downs and Broadleaf from Brazilian firm Vale in 2016, has started the production of coking coal to capitalize on the high coal prices.
Cook, with a capacity of 1.2 mnt per year, was supposed to restart in late 2021 but was pushed back due to bad weather and safety concerns. It restarted in April 2022
Aquila mine, jointly owned by Mitsui and Anglo American, with a capacity of 5 mnt, has also been started in February 2022. Sojitz’s Gregory mine, with 1 mnt capacity, will be restarted by June-end this year.
Anglo American, a UK-South Africa mining company has the greatest potential to increase Australia’s metallurgical coal production by expanding the existing 5-mnt Grosvenor mines and 6.5-mnt Moranbah mines annually. The latter was closed for 4 months as a contractor had died in the workplace and production had been affected. But it is now restarted and slowly raising its output.
There are a few other mines that have acquired approvals for mining and will be starting their operations by 2023, giving a boost to Australia’s coking coal supplies.
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