According to the latest updates, Europe’s second-largest coal-producing nation, Poland, has stopped operations at 12 state-run coal mines for few weeks starting 9 June.
While as a part of the Paris agreement many polluting coal mines are being shut in Europe, the recent decision by Poland has come in the wake of country’s efforts to contain the spread of COVID-19.
Amongst the 12 mines being shut, two thermal coal mines run by state-controlled miner JSW and 10 run by its peer PGG in the Silesia region would halt production for three weeks.
As confirmed by the country’s state-assets minister, this is a temporary suspension of work in mines in which COVID-19 infections have been recorded.
Impact analysis
Poland generates most of its electricity (about 74%) from coal. The increasing infections among miners in the southern region of Silesia (the heartland of coal mining) is a strong blow on the domestic industry suffering from falling demand, increased competition from Russia and Colombia, and accumulated financial losses.
The Polish government has been trying hard to curb country’s coal imports to protect the domestic sector. Under normal circumstances, the suspension of coal mining operations would have led to increased imports, if being offered at competitive rates.
However, market sources opine that stockpiles at PGG and the country’s state-controlled utilities are currently at a high level and amid subdued power demand due to suspension of industrial operations, any significant surge in coal imports is unlikely.
Australian coal mines
Glencore: The latest reports suggest that Glencore’s Rolleston coal mine in Queensland, Australia, has stopped production for two weeks starting 2 June.
The mine has an annual production capacity of 13.94 MnT and mainly produces 5,500 kcal/kg NAR thermal coal to be supplied to China.
Peabody: Last month, another private miner, Peabody had also announced its decision to suspend operations starting 19 June at its Wambo underground thermal and semi-soft coking coal mine in New South Wales, Australia.
The Wambo underground mine sold 2.2 MnT of coal in 2019 out of which 1.8 MnT was thermal coal.
Other miners such as TerraCom has also cut its production guidance at Blair Athol mine for 2020 and 2021 whereas Bengalla mine in New South Wales, Australia, has planned for upcoming maintenance.
Impact analysis
Australia is a amongst the world’s top coal exporters with Japan and China being prime destinations for its exports.
The vessel line-up data with CoalMint reveals that during Jan-May’20, exports to Japan have fallen by 5.5% y-o-y at 42.03 MnT.
Due to COVID-19, the coal demand in Japan has plunged this year and even though the situation has improved since past few weeks, heavy industries have not resumed operations completely, resulting in lackluster power and coal demand.
In case of China, a surge of 16% y-o-y has been recorded at 40.1 MnT during Jan-May 2020. However, in past one month the political tensions between the two countries have adversely impacted their coal trade with the diminished interest from the Chinese buyers.
Subsequently, the suspension of Australian coal mines for a few weeks is expected to bring some balance in the country’s coal demand-supply dynamics.
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