Coal

Coal Trading

Despite a global shift away from traditional coal burning, coal still accounts for 25% of global energy production and is a critical component in iron and steel making production and processes. Imperium Commodity Search has experience across the coal markets from traders and brokers through to operations, logistics, chartering and market analysis.

What is Coal?

Coal is a black sedimentary rock made up primarily of carbon. Similar to other fossil fuels, coal is produced from organic matter that has been heated and compressed underground over millions of years. Most coal deposits are in areas that previously held dense forests and wetlands that have, over millennia, been covered in soil and compressed deeper into the earth, heated and under high pressure convert to coal.

Coal is broadly ranked by quality based on its carbon and moisture content; the harder and higher carbon content that coal has the higher quality the coal is deemed due to its ability to burn at higher temperatures and produce more energy for heat, power generation and in steel making process.

Brown Coal or lignite has a higher ash and moisture content than black coal. It is lower in carbon than black coal and thus has a lower energy yield. In Australia, brown coal isn’t used for export but is sometimes used domestically for power generation.

Black Coal is export grade coal. It has a higher carbon content and thus a higher energy content than brown coal. Black Coal is the overall term to describe coal that is exported on global commodity markets as either thermal or metallurgical coal.

Thermal Coal or Steam Coal refers to coal used in power generation. The coal is ground into a powder to fire a boiler which turns water to steam. The steam produced then turns the turbine to produce energy; hence the name Steam Coal.

Metallurgical Coal or Coking Coal is coal that is of sufficient quality to produce Coke. Coke is primarily used in the smelting of Iron Ore which goes into the production of steel. Coke produces less pollution than thermal coal or brown coal and is sometimes used as a fuel for cooking where pollution is an issue or concern. Metallurgical coal demand and pricing is tightly aligned with the global steel demand.

How is Coal traded?

Coal is a globally traded commodity, transported in bulk vessels often across huge distances. Although coal is used globally, the vast majority of coal produced gets used in the country of origin. It is estimated that less than 20% of coal traded/consumed is exported/internationally traded. The cost of transporting coal is substantial and the cost of imported coal is inflated due to these costs. For this reason, often coal is consumed in the country of production, used for energy production or industrial processes, such as steel making.

Where coal is traded on global markets, it is often traded on a back to back basis, with traders maintaining relationships with mining companies for supply as well as end users, steel smelters or power generation facilities for the sale of coal products.

Who produces the most Coal?

Coal deposits are widely spread globally but by far the largest producer of coal globally is China. The largest 5 producers of coal globally (in MT) are:

China (3.7bn)
USA (922m)
India (605m)
Australia (413m)
Indonesia (386m)

China produces over 45% of global coal and has been the worlds largest producer over the last 30 years. Alongside production, China is also one of the largest consumers of coal globally where up to 80% of power generation is coal fired.

Who uses the most Coal?

China accounts for over half of the total global consumption of coal and relies upon coal fired power plants for its ever growing population. Other countries that produce large volumes of coal also use a large quantity domestically for power generation and industrial process.

Who are the key Coal mining firms?

Much of the global coal mining industry is dominated by the multi-product mining giants, such as BHP Billiton and Anglo American. The largest 5 coal miners as of 2018 are:

Coal India (India)
BHP Billiton (UK/Australia)
Shenhua Group (China)
Arch Coal (USA)
AngloAmerican (UK)

Imperium Commodity Search – Recruiters, Headhunters and Search Firm to the global coal commodity markets

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