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Coal Demand Soars, Profits Triple

The world’s largest mining company has tripled its profits to total more than $97 billion in 2022, beating hopes for an industry thought to be in a terminal decline.

global demand for fuel record levelAccording to Financial Times research and data, total revenues from coal operations at the world’s 20 largest mining companies reached $97.7 billion in the most recent 12 months for which financial information is available. from S&P Capital IQ compared to $28.2 billion in the same period last year.

Energy security concerns became a top priority after Russia’s invasion of Ukraine, so many countries that once promised to quit coal have returned to coal as a reliable source of heat and power.

The biggest moneymaker was Glencore, with $13.2 billion in coal revenue for the 12 months ending June 30. China Shenhua earned $12.2 billion during that time. BHP brought in he $9.5 billion, mostly from coking coal production.

Just one year after the UN’s COP26 climate summit pledged to “phasing out” coal, soaring gas prices and the European energy crisis have reversed the demand for fossil fuels. According to the International Energy Agency, global coal demand will grow by 1.2% and reach a record high in 2022.

According to Argus Media, the benchmark price for high-quality thermal coal in Europe will average $295 in 2022, double the previous year and nearly four times higher than the 2010-2020 average price.

As a result, the mining company experienced an unexpectedly large performance improvement.

Anglo American’s coal division, the world’s fifth-largest producer of coking coal used in steelmaking outside of China, had lost $34 million in the 12 months to June 30, 2021. turned in $2.5 billion in profit a year later.

The largest increase in coal profits was at BHP, which jumped 3,200% from $288 million in the 12 months to 30 June 2021 to $9.5 billion a year later. BHP is the world’s largest coking coal producer outside of China.

and glencorecoal revenues increased to $13.2 billion from $1.2 billion a year ago.

“Offshore producers are the big winners,” said UBS analyst Miles Allsopp. raising.

“The Ukrainian war has caused an extreme tightening of the coal market,” Allsop said, adding that sanctions blocked Russian coal from the European market.

Before coal prices soared, many of the big mining companies outside of China and India were busy shrinking their coal operations.

This was the rationale behind the decision to dispose of BHP’s and Anglo American’s respective stakes in Colombia’s Cerrejón coal mine, which exports high-quality thermal coal to Europe.

In January, they sold a combined 66% stake to Glencore. $101 million in cash and other considerations gave full ownership of the asset to the Swiss-based commodities group, which already owned 33%.

Cerrejón generated $2 billion in earnings before interest, taxes, depreciation and amortization in the first half of 2022. This is many times the purchase price. “It’s probably the best deal we’ve seen,” said Ben Davis, a mining analyst at Liberum Capital.

https://www.ft.com/content/9c62d294-8ee5-42a6-9df0-85e397e93ed1 Coal Demand Soars, Profits Triple

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