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Global investment in coal to rise 10% in 2023 to $150 billion: IEA

Highlights

$135 billion spent in 2022

90% investment to be in Asia Pacific

Lack of finance impacting miners

  • Author
  • Anupam Chatterjee
  • Editor
  • James Leech
  • Commodity
  • Coal Electric Power Energy Transition

Investment in global coal production and supply in 2023 is expected to rise about 10% from the $135 billion spent in 2022, the International Energy Agency said.

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The IEA, in its World Energy Investment 2023, said nearly 90% of this investment will likely be in the Asia Pacific region, notably in China and India where both countries have looked to expand production and develop new coal mines.

About 40 GW of new coal plants were approved in 2022 -- the highest figure since 2016 -- with almost all of these being in China which is focusing on energy security after many regions in the country faced blackouts in the recent past.

The report noted that robust coal demand and high prices during the energy crisis in 2022 are also feeding through into higher global investment. Coal investment had increased to $135 billion globally in 2022, up 20% on year, and is expected to rise to $150 billion in 2023.

While the biggest share of the large profits announced in 2022 was returned to shareholders, they were also used by some to diversify into other commodities and pay off debt, IEA said. Some companies also used profits to buy coal assets, such as the acquisition of the El Cerrejón mine in Colombia by Glencore from Anglo American and BHP, and Thungela bought Idemitsu's stake in Ensham mine in Australia. Some coal companies are also using the profits into investing to emission reduction technologies.

Miners' difficulties

S&P Global Commodity Insights data shows that the price of low-ash Australian 5,500 kcal/kg NAR coal averaged $179.10/mt FOB in 2022, up 110% year on year, amid a surge in global thermal coal prices as a result of the Russia-Ukraine conflict disrupting trade flows and weather-related problems that impacted output, at the same time as rebounding demand. However, coal investments in Australia could increase only by around 10% in 2022 due to mounting development difficulties, especially for greenfield projects.

South African 5,500 kcal/kg NAR coal averaged $212.99/mt in 2022, up 121% on the year. However, logistical challenges and electricity loadshedding in the country have been impeding new large-scale investment in the country, the report said.

The IEA said that, although producers in the US are looking to expand exports in the face of falling domestic demand, a lack of finance and labor, as well as bottlenecks in the supply chain, have slowed investment and this trend is likely to continue.

In Russia, producers are increasing their focus on eastern markets following the country's invasion of Ukraine. This will require investment in new infrastructure, but the prospects for this are very uncertain, the report added.