Coal makes a comeback – but is it short-lived?
The environmental case against coal may be clear, but it’s still a cash spinner

“Make your mind up, Glencore,” says Alistair Osborne in The Times. The FTSE 100 commodities giant, which is the world’s biggest listed coal producer, has scrapped plans to spin off its coal business. “One day coal is a filthy commodity” that harms a blue-chip’s environmental, social and governance (ESG) credentials, the next it is declared “a delightful mineral”, cash-generative and with a role to play in the energy transition.
Many energy companies and miners announced plans to step away from fossil fuels amid the 2021 ESG “frenzy”, say Harry Dempsey and Emma Dunkley in the Financial Times. Most greenhouse gas emissions come from fuels burnt for energy and heating, and coal accounts for more than any other source.
Over the past 12 months, however, some big investors have concluded that ESG was a “fad”. Why? Money talks and coal is still a cash spinner. Bank RBC estimates the fuel will net Glencore about $6 billion in 2024, roughly a third of total earnings, notes Karen Kwok on Breakingviews.
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Is coal back in business?
The energy crisis that followed Russia’s 2022 invasion of Ukraine prompted investors to re-evaluate fossil fuels. A “war premium” and surging costs for natural gas (coal’s main competitor) saw thermal coal benchmarks top $400 a tonne two years ago, says a report from the International Energy Agency. Prices have since slipped about two-thirds from those highs. Newcastle coal futures, the Asian benchmark, are currently trading above $145 a tonne. Greater use of green alternatives should see coal demand first “plateau” and then gradually decline. “Global coal consumption in 2026 is set to be 2.3% lower than in 2023.”
Waning consumption comes as coal production hits new highs, says Megha Mandavia in The Wall Street Journal. Top producers Indonesia and Australia ramped up exports last year, with global output increasing 1.8% to a record 8.7 billion tonnes in 2023. “Coal’s glow has somewhat dimmed” as the resulting glut depresses prices.
Rich countries are rapidly decarbonising – both the US and EU slashed coal consumption by more than a fifth in 2023, says The Economist. But prices are still higher than they were before the 2022 energy crisis. Developing countries are replacing demand lost in the rich world. China, India and Southeast Asia consume three-quarters of global supply, compared with a third in 2000. Emerging economies are also transitioning away from coal, but supply looks set to contract before demand does. ESG concerns have deterred banks from financing new mines and “acquiring permits... is hellish”. With demand and supply in a volatile race to the bottom, some speculators spy an opportunity to turn a profit. But trading coal over the next few years will be a risky game.
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Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
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