The coal boom may be ending sooner than expected, especially for Glencore. The world’s largest exporter of thermal coal has decided to cut production at its Cerrejon mine in Colombia by as much as 10 million tons this year. This means production will fall between 11 and 16 million tons, depending on market conditions.
Coal prices have plummeted. Newcastle coal futures have dropped to around $100 per ton, a sharp decline from the $450 highs seen in 2022 during the energy crisis following the invasion of Ukraine. The main issue now is oversupply, not geopolitics. Both India and China are producing record amounts of coal, causing prices to fall and stockpiles to grow.
Glencore stated on Tuesday, through Bloomberg, that coal prices are now “unsustainable.” In simpler terms: the company profited immensely two years ago, but those days are behind them. Profits have dropped, and they’re hoping that reducing supply will help stabilize the market.
In the U.S., former President Trump is attempting to revive the coal industry with bold statements and talk of reopening closed plants. However, economics remain unyielding. While demand for electricity is rising, fueled by the AI-powered data center boom, natural gas, not coal, is stepping in as the preferred energy source. It’s cheaper, cleaner, and more flexible.
Coal could experience a brief revival if natural gas prices continue to rise, but a full recovery remains uncertain.
As Glencore scales back its production to limit losses and Trump tries to revive coal’s relevance, the market seems to have already made its choice—coal is no longer the star.
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