Global coal production set to grow by only 0.5% in 2020, as production in China disrupted by coronavirus lockdown, says GlobalData

Global coal production is expected to grow only marginally in 2020, from 8.13 billion tonnes (Bnt) in 2019 to 8.17Bnt in 2020 a growth of only 0.5% after three consecutive yearly increases, due to the disruptions caused by the coronavirus pandemic says GlobalData, a leading data and analytics company.

Disruption to date has been most significant in China. Coal production declined by around 6% in the first two months of 2020 as workers could not return to mine sites, owing to the prolonged Lunar New Year holidays as well as road blockages and lockdowns to control the outbreak of the virus. This led to only 57% of China’s coal mines being operational as of February 14. However, by March 4, 83% of China’s coal mining capacity was operational and production is now expected to recover over the remainder of 2020 with a forecast decline of only 1.2% expected by the year end.

Thermal coal production is expected to grow by 0.5% to 7.05Bnt, while metallurgical coal production is forecast to be flat at 1.1Bnt. Over the next four years, production of thermal coal is expected to grow at a compound annual growth rate (CAGR) of 1.9% to reach 7.60Bnt by 2023, due to increasing demand from India and China.

Vinneth Bajaj, Senior Mining Analyst at GlobalData, says: “Across the globe, compared with other commodities coal production is only expected to be marginally affected by the impact of the coronavirus as thermal coal mines are permitted to operate during lockdowns as they are deemed essential to maintain power supplies.”

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 China’s overall annual coal consumption is expected to decline by 0.5%, due to the lockdown of industrial areas with thermal coal consumption falling by around 0.3% in 2020. Through to 1 March 2020, Chinese coal-fired power plants reported a 3% decline in their coal consumption, with an 8% decline in the country’s power generation during the first two months of 2020.

In India around 845Mt of coal is expected to be produced in 2020 – an 8.3% increase compared with 2019. Production from South Eastern Coalfields Ltd (SECL) and Mahanadi Coalfields Ltd (MCL) will be of key concern during the current year, as it recovers from the impacts of the severe monsoon and labor strikes in 2019. Elsewhere, thermal coal mines in South Africa have been permitted to operate despite the country’s 21-day lockdown.

Vinneth adds; “Longer term, whilst power demand is growing, we will see coal declining as a proportion of the power generated. At present 67% and 75% of the electricity in China and India is generated from coal. However, both counties have environmental commitments to reduce carbon emissions, and have targeted to reduce these shares to 58.5% and 50% by 2030 respectively.” 

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