Bulk Buys: Like a game of Snake, coal’s tail is getting longer and longer

Coal could have a far longer shelf-life then renewable advocates hope, as energy security and the AI race shake up the energy transition.

The tail for coal keeps getting longer. Pic: Getty Images

• Coal could be a major part of the global energy make-up for years beyond its previous use-by date

• WoodMac says coal demand could be as much as 32% higher than previously assumed on average to 2050

• Prices are depressed, but could rebound with little new supply coming to market

It's the news of impending doom and cold economic reality renewable investors have been trying to ignore.

The move away from coal is getting slower, and the tail for the world's dirtiest fossil fuel is getting longer.

We've seen these projections developing for years.

Peak coal has been getting delayed: while demand is, on a broader timescale, plateauing, demand still lifted 1.2% in 2024 and is expected by the IEA to edge up from 8.77Bt to 8.87Bt in 2027.

India's rapid industrialisation saw the world's most populous country increase demand 5% to 1.3Bt in 2024, while China's grew 1% to 4.9Bt.

And in the US, Donald Trump's description of the commodity as "beautiful clean coal" and repudiation of green energy incentives has raised the prospect of a reversal in the US after 17% and 5% declines in the past two years.

Now one of the world's top mining and energy consultancies, Wood Mackenzie, says coal is staying in the energy market for a prolonged period.

They think coal demand could be "stronger for longer", despite an oversupplied market that has depressed prices in 2025, with thermal coal currently fetching US$110/t and high quality met coal running at ~US$193/t.

But demand is stickier than some commentators think. WoodMac's base case for the energy transition has coal-fired power generation declining by 70% by 2050.

A high coal demand case however, which is beginning to look more realistic, would see coal generation averaging 32% above the base case through 2050, generating an additional 2Bt in greenhouse gas emissions as 2.1TW of wind, solar, energy storage and natural gas capacity is waylaid between now and 2050.

"Extending coal's prominence through 2030 would fundamentally alter the global energy transition timeline. We're talking about delaying the phase-out of the world's most carbon-intensive fuel source during a critical decade for climate action," WoodMac global head thermal coal markets Anthony Knutson said.

Price movement

While demand could be stronger than most people think, supply will continue to be constrained, Knutson said.

That means prices could run higher from today's depressed levels.

"Private equity and sovereign wealth funds will be needed to fund greenfield and brownfield mine expansions,” Knutson said.

“We expect most Western financial institutions to continue limiting thermal coal investments, with the strongest impact on supply growth from 2025-2030 and longer-term market implications if supply replacement momentum is not maintained.

“While we understand coal demand may remain resilient in coming years, eventually supply constraints will emerge, and this could accelerate price increases globally and erode future demand."

One of the key disruptors in the road to net zero has been the advent of modern generative AI technologies like ChatGPT, Grok and Deepseek.

WoodMac says a rapidly electrifying global economy is colliding with the realities of today's energy technologies.

"AI’s massive appetite for power is driving a strategic race for power supply across every major energy market," the report authors said.

"Zero-carbon power cannot do it all. Energy storage has not evolved fast enough to convert wind and solar into baseload resources. In the US, natural gas is now doing much of the heavy lifting as power demand surges, but cannot do it all, making coal a reluctant lifeline for baseload demand."

Coal-fired power is also seeing a benefit from incumbency and 'sticker shock', with low cost power sources like solar facing tariff threats, reshoring costs and infrastructure delays, and US gas capacity costs doubling in recent years.

"With replacement costs of coal escalating, the value of existing coal assets is rising. Much of this value is tied to the value of capacity rather than to the value of selling energy during high energy price hours. For example, capacity markets in the US have awarded a premium to dispatchable capacity, including coal-fired power," WoodMac said.

This puts lower cost coal suppliers in Australia in a decent spot, even if current prices are touch and go.

New Hope Corp (ASX:NHC) has regularly delivered strong margins thanks to the low costs of its Bengalla operation, while Yancoal Australia (ASX:YAL) continues to boast a healthy buffer, expected H1 2025 cash costs at the mid-range of its $89-97/t guidance against a first half realised price of $149/t.

"We are beginning to see supply-side response to the lower coal prices, which aligns with our view that coal indices are well below marginal cost on the global cost curve. We anticipate further supply-side reductions from higher-cost producers, contributing to a potential recovery in coal price indices, as was the case with past coal price cycles," Yancoal's acting CEO Ning Yue said on the released of the miner's second quarter results last week.

It hasn't been so good for small caps like Australian Pacific Coal (ASX:AQC), Bowen Coking Coal (ASX:BCB) and Coronado Global Resources (ASX:CRN), who are all facing challenges to keep their heads above water at current prices.

BCB, which is facing a statutory demand for the payment of ~$6.8m to creditor BUMA, was unsuccessful in its first attempt to have royalties payable to the Queensland Government deferred.

It plans to submit a revised proposal after discussions with the Queensland Government. The State's steep and controversial tiered royalty system was introduced in its current form in 2022, during an all time boom in coal prices following Russia's invasion of Ukraine.

In its second quarter results on Thursday, Coronado sold 3.7Mt of met and thermal coal, at an average mining cost of US$92/t, down 18.4% on the previous quarter. Its average realised price came in at US$148.40/t, down 1.9% QoQ, with its first half sales price down 24.8% YoY.

Financial restructuring has improved the miner's balance sheet, but the company remains reliant on an uptick in coking coal prices to move into the clear.

"At current pricing, CRN is loss making and there remains risks to the balance sheet," Argonaut's Jon Scholtz, who has a buy rating and 30c PT on CRN, said in a note.

"We are bullish on the medium-term price outlook for coking coal and note that CRN has significant leverage to coking coal prices. On our forecasts CRN has FCF yields of >10% from CY27 onward."

ASX coal stocks

CODE	COMPANY	PRICE	WEEK %	MONTH %	6 MONTH %	YEAR %	YTD %	MARKET CAP
NAE	New Age Exploration	0.004	14%	33%	14%	14%	14%	$ 9,470,689.92
CKA	Cokal Ltd	0.032	-6%	7%	-46%	-63%	-47%	$ 32,368,469.40
BCB	Bowen Coal Limited	0.075	0%	-22%	-89%	-98%	-91%	$ 8,081,816.70
SVG	Savannah Goldfields	0.018	-18%	6%	8%	-41%	-2%	$ 20,548,386.70
AKM	Aspire Mining Ltd	0.25	-11%	-4%	2%	-17%	-2%	$ 137,061,985.95
AVM	Advance Metals Ltd	0.046	0%	0%	21%	59%	35%	$ 12,588,795.36
YAL	Yancoal Aust Ltd	6.56	7%	12%	4%	-5%	1%	$ 8,688,491,495.46
NHC	New Hope Corporation	4.36	7%	12%	-12%	-7%	-12%	$ 3,702,569,332.32
TIG	Tigers Realm Coal	0.003	0%	0%	0%	-14%	0%	$ 39,200,107.10
SMR	Stanmore Resources	2.45	16%	30%	-14%	-34%	-19%	$ 2,226,437,335.98
WHC	Whitehaven Coal	7.03	15%	26%	10%	-11%	13%	$ 5,976,802,934.26
BRL	Bathurst Res Ltd.	0.84	6%	8%	14%	4%	12%	$ 199,179,312.25
CRN	Coronado Global Res	0.195	22%	44%	-73%	-85%	-75%	$ 318,526,208.70
JAL	Jameson Resources	0.085	49%	81%	143%	42%	113%	$ 59,564,847.05
TER	Terracom Ltd	0.085	8%	1%	-53%	-58%	-53%	$ 68,082,129.98
MCM	Mc Mining Ltd	0.11	-12%	20%	-8%	-21%	-4%	$ 70,806,140.13
DBI	Dalrymple Bay	4.57	1%	15%	25%	51%	27%	$ 2,235,885,118.17
AQC	Auspaccoal Ltd	0.017	-6%	-69%	-77%	-81%	-83%	$ 11,207,481.46

Iron ore price in action

Coal may be in the doldrums right now.

But iron ore is making a roaring comeback, escaping months of mid-90s purgatory to sail to US$105/t in Singapore yesterday.

Some of the positive momentum was sapped by a strong quarter from Vale, which shipped 83.6Mt in June for its strongest second quarter since 2021. The Brazilian miner's output has been key to the supply-demand balance in the global iron ore market, after the last boom was set off by the closure of a number of its mines for safety checks following the January 2019 Brumadinho disaster.

But any news about new supply, including incremental growth from the three Pilbara majors, Mineral Resources (ASX:MIN) and the impending opening of Guinea's massive Simandou operation in November, has faded into the background against Chinese demand signals.

The start of work on a US$124 billion hydroelectric dam called Yarlung Tsangpo has driven sentiment higher.

It's a controversial project as it is being built in Tibetan territory in a river that runs into neighbouring Bangladesh.

But it has awakened positive sentiment in China, where steel prices have also recently been rising also due to efforts to close down idle or outdated capacity to improve the profitability of the long-struggling sector.

Iron ore major Fortescue (ASX:FMG) delivered its June quarter numbers on Thursday, revealing a record 55.2Mt of shipments, powering a record FY25 performance of 198.4Mt, up 4% on FY24.

Iron Bridge, FMG's new magnetite mine, delivered 2.4Mt to hit 7.1Mt for the full year, with hematite C1 costs of US$16.29/wmt in Q4 and US$17.99/wmt in FY25, 1% down on FY24 and the Andrew Forrest-led miner's first annual cost drop since FY2020.

FMG has guided 195-205Mt of shipments for FY26 at a C1 hematite cost of US$17.5-18.5/wmt. Iron Bridge is expected to deliver 10-12Mt and hit its 22Mtpa nameplate by FY28.

Meanwhile, FMG has dumped two early green energy projects, in music to the ears of investors and sell-side analysts concerned about its green hydrogen capex bills, with Arizona Hydrogen and the PEM50 project in Gladstone now off the table.

The miner, which was up over 4% on Thursday, will write down an anticipated US$150m pre-tax on PEM50 and Arizona Hydrogen investments, with FY26 capex and opex guidance for the energy division of US$300m and US$400m respectively.

The metals business will receive US$3.3-4bn in capex, including US$900m-1.2bn on decarbonisation and US$300-400m for exploration and studies.

ASX iron ore stocks

CODE	COMPANY	PRICE	WEEK %	MONTH %	6 MONTH %	YEAR %	YTD %	MARKET CAP
ACS	Accent Resources NL	0.008	0%	0%	33%	14%	33%	$ 3,916,298.26
ADY	Admiralty Resources.	0.006	0%	50%	0%	-45%	0%	$ 15,776,876.39
AKO	Akora Resources	0.11	-4%	25%	0%	-27%	10%	$ 13,739,463.40
BCK	Brockman Mining Ltd	0.017	21%	21%	21%	-11%	6%	$ 157,763,946.23
BHP	BHP Group Limited	41.6	6%	17%	6%	0%	5%	$ 212,430,275,034.75
CIA	Champion Iron Ltd	5.26	17%	33%	-7%	-12%	-9%	$ 2,751,575,165.16
CZR	CZR Resources Ltd	0.25	14%	9%	39%	-6%	19%	$ 54,516,615.95
DRE	Dreadnought Resources Ltd	0.011	0%	10%	-8%	-52%	-8%	$ 55,874,500.00
EFE	Eastern Resources	0.031	-3%	0%	-3%	-38%	11%	$ 3,908,788.36
CUF	Cufe Ltd	0.01	25%	67%	18%	-17%	0%	$ 12,119,173.79
FEX	Fenix Resources Ltd	0.305	5%	9%	13%	-22%	15%	$ 237,166,250.88
FMG	Fortescue Ltd	19	13%	31%	2%	-10%	4%	$ 56,067,951,156.78
GEN	Genmin	0.025	-11%	-4%	-26%	-81%	-38%	$ 23,956,724.75
GRR	Grange Resources.	0.185	0%	6%	-8%	-46%	-16%	$ 214,107,659.13
HAV	Havilah Resources	0.19	6%	9%	-14%	-7%	-16%	$ 66,154,977.72
HAW	Hawthorn Resources	0.054	0%	-7%	17%	-22%	32%	$ 18,425,858.72
HIO	Hawsons Iron Ltd	0.018	-10%	-5%	20%	-31%	0%	$ 19,189,891.30
IRD	Iron Road Ltd	0.03	20%	-9%	-43%	-60%	-49%	$ 24,920,783.25
JNO	Juno	0.026	-7%	-4%	4%	-16%	4%	$ 5,649,400.32
LCY	Legacy Iron Ore	0.009	-10%	0%	0%	-48%	-10%	$ 87,858,383.26
MAG	Magmatic Resrce Ltd	0.05	-15%	19%	-4%	-19%	67%	$ 22,554,786.41
MDX	Mindax Limited	0.059	-2%	5%	48%	13%	48%	$ 140,920,372.08
MGT	Magnetite Mines	0.085	4%	-9%	-26%	-71%	-29%	$ 10,677,240.02
MGU	Magnum Mining & Exp	0.007	-7%	133%	-23%	-23%	11%	$ 16,226,260.04
MGX	Mount Gibson Iron	0.38	15%	46%	15%	1%	29%	$ 442,660,775.63
MIN	Mineral Resources.	32.1	17%	57%	-9%	-41%	-6%	$ 6,025,260,398.64
MIO	Macarthur Minerals	0.025	0%	39%	-49%	-61%	-46%	$ 4,991,637.75
PFE	Pantera Lithium	0.019	3%	58%	12%	-36%	6%	$ 8,764,998.23
PLG	Pearlgullironlimited	0.015	36%	88%	25%	-12%	-6%	$ 3,068,126.85
RHI	Red Hill Minerals	3.5	6%	19%	-14%	-32%	-15%	$ 227,653,068.75
RIO	Rio Tinto Limited	119.86	8%	18%	2%	5%	2%	$ 44,349,201,086.58
RLC	Reedy Lagoon Corp.	0.002	33%	33%	-33%	-33%	0%	$ 1,553,413.35
CTN	Catalina Resources	0.005	25%	67%	52%	113%	33%	$ 10,917,085.65
SRK	Strike Resources	0.035	6%	0%	17%	0%	30%	$ 9,931,250.00
SRN	Surefire Rescs NL	0.002	0%	0%	-40%	-66%	-32%	$ 6,457,218.50
TI1	Tombador Iron	0.35	0%	0%	0%	0%	0%	$ 30,213,639.40
TLM	Talisman Mining	0.145	4%	12%	-29%	-44%	-29%	$ 29,189,654.10
EQN	Equinoxresources	0.083	2%	14%	-31%	-73%	-21%	$ 13,211,460.84
AMD	Arrow Minerals	0.02	0%	0%	-55%	-67%	-50%	$ 17,555,331.82
CTM	Centaurus Metals Ltd	0.395	13%	20%	-2%	10%	11%	$ 191,229,967.01
LM1	Leeuwin Metals Ltd	0.14	0%	8%	17%	71%	0%	$ 15,120,957.60
M4M	Macro Metals Limited	0.007	-13%	-22%	-46%	-78%	-42%	$ 27,841,922.70

Originally published as Bulk Buys: Like a game of Snake, coal’s tail is getting longer and longer