A looming global shortage of coking coal supply is being exacerbated by problems with investing in new mining capacity. If supply does not pick up, coking coal markets could “break”, according to Mark Bolton, general manager for marketing and logistics at Jellinbah Group.

At the heart of the problem are barriers to investment. In Australia, investment is increasingly difficult and risky. Permitting applications are taking much longer and are more complicated. They can also be questioned even after they are issued, meaning investors must bear a greater risk to their investments, Bolton noted at the Eurocoke conference in Amsterdam on Wednesday, attended by Kallanish.

Applications must now also come with solutions for Scope 1 carbon emissions. These include equipment, which can be electrified or use hydrogen, and also fugitive gases, which are difficult to control.

Sources of financing have meanwhile been reduced. Investors, especially from Europe, are less willing to involve themselves with any kind of coal. 

Even if projects secure permitting and investors, it is increasingly difficult to find labour. Local Australian governments do not want to approve new mining villages and workers do not want to work on a fly-in fly-out basis.

Coking coal buyers are responding to looming shortages by either paying a premium to secure regular supply, or by vertically integrating through investing into miners. However, this is only capturing existing supply, not expanding total supply, Bolton pointed out.

As a result, there could come a breaking point for coking coal markets, Bolton warned. Steelmakers may be forced to accelerate the move to new technologies to reduce their use of coking coal, or else be forced out of the market altogether.