Global coal production will grow this year despite covid-19

According to the analytics company, disruption 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 due to the coronavirus outbreak.

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 7.05 billion tonnes, while metallurgical coal production is forecast to be flat at 1.1 billion tonnes.

Over the next four years, production of thermal coal is expected to grow at a compound annual rate of 1.9% to reach 7.6 billion tonnes by 2023, due to increasing demand from India and China.

“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,” says Vinneth Bajaj, senior mining analyst at GlobalData.

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 845 million tonnes of coal is expected to be produced in 2020 – an 8.3% increase compared to 2019.

Elsewhere, thermal coal mines in South Africa have been permitted to operate despite the country’s 21-day lockdown.

“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,” Vinneth adds.

“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.”