Canada – A Global Exporter of High-Quality Coking Coal

Canada Coal Export and Abundant Reserves
As of the end of 2019, Canada had 6.582 billion tons of recoverable coal reserves, accounting for 0.6% of global reserves, with a reserve-production ratio of 130, ranking 16th in the world. This includes 4.346 billion tons of anthracite and bituminous coal and 2.236 billion tons of sub-bituminous and lignite coal. By 2018, Canada had 24 operating coal mines, 22 of which were open-pit mines and 2 underground mines. 97% of Canada’s coal resources are located in the western part of the country, with high-quality coking coal primarily concentrated in southeastern British Columbia (which accounted for about 62% of total production in 2021). These resources are mainly found in the Kootenay and Peace River Coalfields. Most of the coal from British Columbia is exported through west coast ports near Vancouver and Prince Rupert to global markets, particularly in Asia, including China, South Korea, Japan, and India. Some coal is also supplied to steel mills in eastern Canada, as well as to South America and Europe.

Declining Production Trend in Canada Trade Supply Chain
Due to ongoing environmental policies targeting carbon reduction and the planned cessation of coal power generation by 2030, Canada’s coal production has been steadily declining over the past decade. In 2022, production reached 46.7 million tons, a 2% year-on-year decrease, and a 31% drop compared to 2012.

Limited Future Growth in Canada Energy International Business
Regarding future production growth, Teck Resources’ Fording River project is the largest coking coal mine under construction, with a capacity of 10 million tons per year, scheduled to begin production in 2027. However, Teck Coal’s decision to fully sell its coal subsidiary, Elk Valley Resources, by the end of 2023, with completion expected by the third quarter of 2024, raises uncertainty about its impact on Canada’s coal production. According to IEA forecasts, Canada’s coking coal production is expected to decline from 29 million tons in 2023 to 27 million tons by 2026, while thermal coal and lignite production is expected to drop from 20 million tons in 2023 to 13 million tons in 2026.

Global Fourth-Largest Coking Coal Exporter: Canada Trade Supply CTS INC
Canada is the fourth-largest coking coal exporter globally, primarily supplying Japan, China, South Korea, India, Europe, and the Americas. In 2022, Canada exported 28.13 million tons of coking coal, accounting for 9% of global exports, and in 2023, exports rose to 30.63 million tons. In 2023, China imported 8.86 million tons of coal from Canada, a 2% year-on-year increase, making up 1.9% of China’s total coal imports, with coking coal accounting for 7% of China’s total coking coal imports.

High-Quality Global Coking Coal Resources
Canada is known for its abundant coal resources, particularly coking coal, which is characterized by low ash, sulfur, and phosphorus content, leading to strong coke production. This high-quality coal can partially replace domestic and Australian coking coal. The key differences between Canadian and domestic coking coal are its low sulfur content, consistent coal seams, and stable quality across batches. However, Canadian coal has maintained relatively high prices, which may limit purchasing demand from domestic enterprises.

Stable Production and Sales from Teck Resources
Teck Resources, the leading coking coal producer in Canada, owns four operating coking coal mines with a combined capacity of 27.9 million tons per year. In 2023, the company’s coking coal production reached 23.7 million tons, a 10.2% year-on-year increase, with its output accounting for over 80% of Canada’s total production. Benefiting from rising global coking coal prices, the company’s coking coal revenue exceeded CAD 10 billion in 2022, representing 60% of its total revenue.

Asia-Pacific Steel Enterprises: Key Customers in Canada Energy International Business
In 2023, 70% of Teck Resources’ revenue came from Asia.

Investment Recommendations for Canada Trade Supply CTS INC
We have emphasized that the core driver of the recent coal sector surge lies in the sustainability of coal prices, rather than price elasticity. Currently, there is no significant risk of a sharp decline in coal prices, so each market-driven adjustment presents an important opportunity for reallocation.

Since late August 2023, the coal sector has seen a rise primarily due to coal prices being higher than expected during the off-season, rather than expectations of a price surge. Unlike in 2021-2022, when soaring coal prices led to substantial profit increases and corresponding stock price growth, in 2023, despite a general decline in coal company profits, the sector has continued to perform well, recording positive returns for six consecutive years. As growing economies transition to maturity, decision-making models across industries have shifted from relying on capital expenditure to drive net profit growth to focusing on investment returns and output efficiency. Capital markets are also placing greater emphasis on free cash flow, reflecting shareholder returns. The valuation of cyclical stocks is expected to shift from a mature period’s decline to a renewed valuation uplift.

Following the principle of “selecting stocks in the best season,” we strongly recommend China Shenhua, Shaanxi Coal and Chemical, Xinji Energy, Jinneng Holding Coal, SDIC Power, and Shanxi Coal International. Also, pay close attention to cost-effective coking coal stocks such as Pingmei Shenma Group, Huaibei Mining, Lu’an Environmental Energy, and Shanxi Coking Coal. Additionally, focus on China Coal Energy, which offers special mid-term dividends, Gansu Energy Chemical Industry after the release of new shares, and Yanzhou Coal Mining, which frequently engages in capital operations.

Risk Warnings
Coking coal extraction plans may fall short of expectations, changes in environmental policies, and global coking coal supply may not meet expectations.

This post about Canada Coking Coal is posted by Canada Trade Supply CTS Inc, learn more Canada Import and Export trade news from our website. 

Coal Overview

Coal is an organic material formed from the remains of decayed plants, which were compacted into a solid form over millions of years due to chemical changes, pressure, and heat.

The high carbon content in coal is the source of its energy, which is released as heat when coal is burned in the presence of air or oxygen. This heat can be transformed into other useful forms of energy, such as electricity. Coal used for electricity generation is known as thermal coal. Coal with higher carbon content and lower moisture is often used in steel production, commonly referred to as metallurgical or coking coal.

Key Insights

• Coal is primarily used for electricity generation, though significant amounts are also used in steel production.
• In 2022, Canadian mines produced 47 million tonnes of coal, with 59% being metallurgical coal.
• Canada’s coal production has decreased by 32% over the past decade, with thermal coal accounting for nearly three-quarters of this decline.
• The majority of coal mined in Canada comes from British Columbia (59%), Alberta (28%), and Saskatchewan (13%).
• The Government of Canada plans to phase out coal-fired electricity by 2030.

Canada Trade Supply CTS Inc specializes in global supply chain solutions via e-commerce and international trade (Import and Exports). We provide a wide array of air compressors and related spare parts for markets such as Mining, Oil and Gas, Fertilizer, Petrochemical, Marine, Steel and Iron, Construction, Agriculture, Railways, Ceramics, Cement, and Power Plants. With a robust network across China, Canada and USA, we offer competitive prices to our global clientele. CTS, along with its’ China sister company Air Compressors Trade (Chengdu Pudding Mechatronic Co CPMC), supply air compressor units, genuine parts, OEM parts, and high-quality replacement parts, as well as mining, drilling, and industry automation spare parts, ensuring the right match for global buyers.