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Earlier this week, on September 19-20, Asian coal players gathered in Bali, Indonesia. They took stock of the market, which has been booming since the outbreak of the conflict in Ukraine. With one observation: coal is not dead.
Coal is back, while in recent years, Western countries have gradually programmed the exit of this highly polluting fossil material. But in the face of soaring gas and oil prices, due to the conflict in Ukraine, the world demand for thermal coal intended for the production of electricity has increased sharply. For example, in Europe, where Russian gas is becoming scarce, several countries are using this fuel to produce electricity.
This year, European thermal coal imports could be the highest for at least four years. Faced with energy shortages, China, the largest coal consumer in the world, has also greatly increased its production for its domestic needs. This increase raises great concern about the climate consequences of this choice, the Middle Kingdom being the world’s largest emitter of greenhouse gases.
Tensions in the global coal market
With rising demand and production struggling to keep up, the result is tension in the global coal market, which is causing prices to soar. For example, Newcastle’s Australian benchmark coal has more than doubled in the last twelve months. An increase that benefits major exporting countries such as Australia, Indonesia, but also some African countries. This is the case for South African coal exports to Europe: they have exploded this year.
Other countries like Tanzania, which traditionally exported its thermal coal to neighboring countries, are beginning to export by sea to European countries. In this context of an energy crisis that is likely to last, the players in the coal market who met in Bali believe that this fuel will remain, at least in the short term, an important source of energy.