Glencore boosts Australian coal exports

Switzerland-based trading and mining firm Glencore increased its exports of Australian coal during July-September to the highest level since 2019, as it reversed production controls to take advantage of firmer prices for thermal and hard coking coal.

Glencore produced 15.5mn t of thermal coal and 2.5mn t of coking coal for export during July-September, up from 13mn t and 1.7mn t respectively for April-June and 13.5mn t and 1.9mn t in July-September 2020. This was the most produced of both coal types since October-December 2019, prior to the Covid-19 pandemic and China's informal ban on Australian coal imports.

The firm expects the strong Australian coal exports to continue through October-December, as it targets the middle of its 100mn-108mn t of coal output from its global operations in 2021.

Glencore began winding back its operations in Australia in 2020 as prices for thermal and metallurgical coal fell to uneconomic levels because of the economic slowdown associated with Covid-19 and as Beijing began restricting imports of Australian coal. Thermal coal exports fell to a quarterly low of 12mn t for January-March, which contributed to year-to-date shipments for 2021 being 6pc below 2020 and 15pc below 2019.

While Beijing is still not allowing additional Australian coal to unload at its ports, firmer demand in other parts of the northern hemisphere pushed price to record highs last month. Glencore responded by pushing up production last quarter and by cutting semi-soft coking coal production in favour of thermal coal, reducing costs and increasing the yield by reducing the amount of washing the coal requires.

Prices have eased in the past couple of weeks but are still strong enough to encourage mining firms to keep mine operations running over the Christmas break, rather than taking an extended holiday as they did last year.

Argus last assessed the high-grade 6,000 kcal/kg NAR thermal coal price at $197.40/t fob Newcastle on 29 October, down from a high of $251.43/t on 15 October but up from $151.90/t on 30 July. It assessed lower grade coal at $147.79/t fob Newcastle for NAR 5,500 kcal/kg on 29 October, down from a high of $164/t on 22 October but up from $108.67/t on 10 September.

Argus last assessed the premium hard coking coal price at $403/t fob Australia on 29 October, up from $107.15/t on 30 April. It assessed the semi-soft coking coal price at $235.70/t fob Australia on 29 October, up from $126.90/t on 19 July and from $71.20/t on 31 December.

By Jo Clarke

Glencore Australian coal production	(mn t)
Jan-Sep '21	Jan-Sep '20	Jan-Sep '19
Coking coal	6.6	5.6	6.1
Semi-soft coking coal	3.5	3.6	5.1
Thermal coal exports	40.5	42.9	47.8
Thermal coal domestic use	4.2	4.9	6.2
Source: Glencore

Thermal coal prices($/t)

Metallurgical coal prices($/t)