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High-ash thermal coal: demand pull or supply push?

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27 October 2016

High-ash thermal coal: demand pull or supply push?

Report summary

The production of high ash thermal coal has increased in Australia largely due to Chinese coastal demand and producers looking to maximise the value of their product portfolios. However, in the current market producers may be incentivised to switch from high-ash too more low-ash production as the discount outweighs the cost savings for producing the high-ash product. Processing capacity constraints may restrict a mine's ability to switch between a high-ash and low-ash product. The decision is whether to invest in the development of mine infrastructure and processing plants to produce more washed low-ash coal, or proceed with business as-usual.

Table of contents

  • Executive summary
  • The rise of high-ash thermal coal
  • Why produce high-ash coal?
  • Conclusion
  • Annex 1: Australian 2016 seaborne thermal coal cost and margin curves

Tables and charts

This report includes 10 images and tables including:

  • High-ash thermal coal production by country, Mt
  • High-ash coal marketable reserves as of 2016, Bt
  • Specifications of Australian benchmark high-ash coal
  • Production, change in NPV (2011-15) due to inclusion of high-ash product and breakeven high-ash coal discount by mine
  • Actual and breakeven high-ash coal discounts by mine
  • Factors influencing high-ash thermal coal production in Australia
  • Mines position on cost curve with high-ash production*
  • High-ash thermal coal: demand pull or supply push?: Image 7
  • Mines position on margin curve with high-ash production*
  • High-ash thermal coal: demand pull or supply push?: Image 9

What's included

This report contains:

  • Document

    high-ash thermal coal.xls

    XLS 330.00 KB

  • Document

    High-ash thermal coal: demand pull or supply push?

    PDF 356.74 KB

  • Document

    High-ash thermal coal: demand pull or supply push?

    ZIP 549.05 KB

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