February 25, 2024 - 2023 marked “another all-time high in global coal production”, totalling 8,741 million tons,” the International Energy Agency has said, citing growth in China, India and Indonesia ‘more than offsetting” declines in the US and the EU.

“Steam coal and lignite account for about 87% of global coal production and their growth in production accounts for similar share of the global production increase,” they noted, with coking coal accounting for the balance, driven by strong growth in Mongolia.

“Global coal production is forecast to have risen by 1.8% in 2023, with continued growth in India, China and Indonesia more than offsetting declines in the United States and the European Union,” the agency said.

“Further growth in global coal demand in 2022, after the big rebound in 2021, pushed global coal supplies to new highs of about 8 582 Mt (up 7%). The increase was led by China, which drove up domestic production to reduce its exposure to high import prices and to avoid supply shortages.”

“Indonesian production growth overtook Indian growth, with exports seeing a remarkable uptick to serve increased seaborne demand for thermal coal amid a rise in domestic demand,” the agency said.

However, it noted that, a net reduction was expected in global coal production starting in 2024, which would mean global coal production peaking in 2023 in line with global coal demand.

“Ongoing declines in the United States and the European Union are likely to be complemented by reduced production volumes in Indonesia, as Chinese demand for seaborne thermal coal is likely to decrease,” the IEA reported.

“The last bastion of remarkable growth in production is India, serving the growing demand from its power sector. Our model suggests that declines in other countries will more than offset this growth, resulting in global production of 8 394 Mt in 2026.”

Meanwhile, output from coal mines in India which are being auctioned to private companies are expected to boost production from that cohort by over 40% to 20 million metric tons in 2024/25.

Bids opened on February 20th for some of the 32 commercial coal mines that were made available for auctioning in December, with a total of 40 bids received.

“A total of 33 bids have been received … where two or more bids have been received for eight coal mines and single bids have been received for 5 coal mines,” a statement from the government said.

The remaining seven bids have been received for a second attempt to auction a tranche of three coal mines, it added

The country is the world’s second largest coal user, and the auctions of coal blocks to private mining companies is a departure from restrictions which saw Coal India dominate the market until now.

India expects domestic coal output to grow by 10.9% in the year to March 2025 to 1,134.8 million metric tons – with increased output of 9& projected for the mines under Coal India control.

Responding to the IEA figures, Mining Technology reports that “China is the keystone of the global coal market” and that the “Asian nation made up 54% of global consumption in 2022, with the main driver being thermal coal for power generation.”

It says that the there is little evidence to suggest that the IEA estimates of a reduction in China’s coal-fired power generation will play out.

“Instead, several factors suggest China will continue to rely on coal-fired power generation, with energy security a key priority for the Chinese Communist Party (CCP) in the midst of global geopolitical instability. There are also issues with the nation’s grid that will make the transition away from coal to more distributed, volatile renewables more difficult than is sometimes assumed,” their analysis claimed.

The industry paper said that “China’s focus on coal is tied to energy sovereignty”, and that “according to US think tank Global Energy Monitor (GEM), construction in China made up more than 95% of new coal-fired power capacity under development in the world last year.

“Yet the IEA predicts the beginning of a structural decline in coal consumption in 2024. It says recent build-outs are “a risk that may cause lock-in effects, weighing on future efforts to cut emissions”. Its latest report appears to ignore a role for coal in achieving the energy sovereignty that is at the heart of CCP policy,” the analysis said.

It quoted Christopher de Vere Walker, head of power and utilities research at non-profit Carbon Tracker, as saying “China’s market is driven by energy sovereignty” and in a world of geopolitical instability “they will continue to put sovereignty over anything else”.