The coal market in Canada is expected to decline at a CAGR of more than 3% during 2020 - 2025. Despite decreasing production, the market is expected to be driven by the metallurgical, cement, and other end-user industries. Although power generation from coal is declining, existing thermal plants are likely to consume a significant amount of coal during the forecast period. However, the market is continuously witnessing a downfall in demand attributing to climate change policies and shifting focus on renewable energy sources for electricity generation.
- With the decreasing share of coal in the country's electricity generation mix, the share of coal in the metallurgy industry is increasing and is expected to dominate the market during the forecast period.
- Canada exports the majority of its produced coal to countries like South Korea, Japan, India, China, etc. India and China produce significant electricity generation from coal, with China and Japan having plans to make more coal-fired power plants in the coming year, this is expected to create considerable opportunities in the near future.
- Rising environmental concerns over greenhouse gas emissions and global warming are expected to restrain the growth of the coal market in Canada during the forecast period.
Key Market Trends
Metallurgy Sector to Witness Significant Growth
- Around 70% of global steel production is dependent on coal. Metallurgical coal or coking coal is a vital ingredient in the steel making process. Pulverized Coal Injection (PCI) technology involves injecting coal directly into the blast furnace to provide the carbon for iron making.
- In 2019, steel production in Canada decreased to 12.8 million metric tons in comparison to 13.4 million metric tons in 2018. Steel production is likely to drive coal consumption significantly.
- Canada's exports are primarily metallurgical coal. In 2018, Canada exported 34 million tonnes of coal around the world and imported 7.6 million tons of coal, mostly from the United States.
- In 2019, Canada exported over 3.1 million metric tons of steel to the United States, which is the biggest imported of Canadian steel. The United States accounts for over 89% of Canada's steel exports.
- The coal consumption is likely to decrease due to a decreasing share in power generation. Although post-COVID-19, with an increasing market of construction and infrastructure, steel production is expected to drive the coal demand.
Rising Environmental Concerns to Restrain the Market
- Rising environmental concerns in Canada and the world over greenhouse gas emissions from the burning of coal and global warming are expected to restrain the coal market in the country.
- Due to climate change policies, the production of coal witnessed a downfall to 0.4 EJ in 2019, from a high of 1.51 EJ in 2013. The production is likely to decrease further by the end of 2020 due to market restrictions.
- The Canadian government has already phased out the usage of coal for electricity generation and the energy produced by coal will be eliminated by 2030.
- Although coal will still be used for metallurgical purposes in the country, the phasing out of coal for electricity generation will have a huge impact on the coal market in the country.
- The decrease of coal consumption due to environmental policies and increasing renewable share, the market for coal in Canada is expected to further decrease during the forecast period.
The Canada coal market is moderately consolidated. Some of the major companies include Peabody Energy Corp, Arch Coal Inc, Alliance Resources Partners, L.P., NACCO Industries, Inc., and Contura Energy Inc.
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