Insight Conversations
Exclusive interviews with global leaders in the coking coal and iron ore industry
Global metallurgical coal and iron ore markets are undergoing a significant shift in a year marked by geopolitical tensions and China's decarbonization strategy.
Mongolia, now the largest supplier of coking coal to China, is planning to introduce coking coal futures contracts on its stock exchange, opening itself to global markets.
But Australia still remains a key player, offering diverse coal grades and proximity to emerging markets. Australian companies are focusing on green iron production and finding opportunities to support China’s efforts in advancing its decarbonization initiatives in the steel sector.
In this context, lifetime cycle assessment companies are also playing a critical role in evaluating carbon footprint of the Chinese steel industry.
Amid its decarbonization focus, China is also reshaping the global coking coal trade dynamics through its tariffs on US met coal, setting the stage for India solidifying itself as a key infuencer in seaborne coal markets.
In this series, S&P Global Commodity Insights reporters talk to five global industry leaders who unravel key factors that are going to impact the coking coal and iron ore markets.
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Matt Latimore, M Resources
Matt Latimore, M Resources Founder and President
Australia’s M Resources created a buzz when its joint venture with Golden Energy completed the $1.65 billion purchase of a key Australian metallurgical coal mine in September 2024.
Matt Latimore, founder and president of M Resources, speaks with S&P Global Commodity Insights Senior Editor Anthony Barich about how he sees key international macro drivers impacting metallurgical coal markets, including policies in the US, India and China.
What are the key opportunities for the Australian metallurgical coal industry going forward?
The seaborne metallurgical coal market is anticipated to grow substantially over the coming years, by around 50 million mt/year in 2035. This growth will be largely attributed to the significant increase in the construction of blast furnaces in India and Southeast Asia.
Australia’s geographical proximity will be advantageous, optimizing trade flows in the region. Australia also has numerous grades of metallurgical coal, with a stable and proven supply, earning it a positive reputation in international trade markets.
How much longer until coking coal prices are expected to start recovering, and what factors could impact this?
We are already starting to see some positive improvements in steel prices globally. Regionally, some are rising faster than others, with a stronger steelmaking complex boding well for the coal industry.
Regional protectionism in India, Europe and several other places will likely bolster their respective domestic steel production and positively counter steel imports from China.
In terms of supply, it is clear that numerous coal operations globally will be making cash losses at current prices. It is expected that there will be associated production cuts and pullbacks, particularly for higher costs and smaller producers, with higher strip ratios in open-cut or continuous miner operations underground.
Lower-quality producers with smaller margins will also likely make earlier decisions to reduce costs.
As demand improves, production will increase, and supply will again come under pressure, and we can expect to see prices rebound. We anticipate seeing this change in market dynamics toward the end of 2025.
What will happen if India’s coke quantitative restrictions (also known as quotas) get extended past the initial period of January-June?
The coke quotas are good for enhancing domestic production and will improve direct demand for metallurgical coal.
India reducing the amount of imported coke will mean that it will need to produce more coke within the country, and that will require greater imports of metallurgical coal.
Are US export flows expected to adapt more to new markets (Asia) during this low pricing environment and amid slowing European demand?
US exports to Asia have been increasing steadily over recent years, particularly to India and Southeast Asia, where the proportion of imports from the US has risen quite sharply.
The US has a variety of metallurgical coal “qualities” that are very useful in coke making, particularly the high-fluidity coals that help binding characteristics in the blend. Additionally, the US has been a source for the diversification of coal imports.
The ongoing challenge with US imports to Asia is the question of freight and who pays the cost differential. At low prices, especially loss-making prices, this becomes a harder proposition for both parties to bear and remains an ongoing question for steelmakers.
How could China’s imposition of a 15% tax on US coal imports reshape global trade dynamics?
Geopolitical tensions between the US and China continue to create market uncertainty. China’s imposition of the tax on US coal effectively eliminates a terminal market and will intensify competition in other markets.
The concern around the US government’s proposal of a service fee of up to $1 million on Chinese-owned ships is also providing some uncertainty for steelmakers regarding freight costs, in addition to the normal differences based on distance referenced above.
Freight costs are at historically relatively low levels. Rates will be determined by usual factors such as the number of new builds and scrapping, though importantly, the amount of global seaborne trade and protectionist measures could have an impact on this and resultant freight rates.
In the short term, there could be various distortions in the market if one region, such as the US, imposes restrictions on Chinese ships -- until trade flows readjust to non-Chinese-owned ships servicing affected areas and Chinese ships servicing other areas.
Next interview
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Randall Atkins, Ramaco Resources
Randall Atkins, Ramaco Resources Chairman and CEO
Tariffs that the US and China have levied against one another have introduced further unpredictability to metallurgical coal markets.
Randall Atkins, chair and CEO of US-based metallurgical coal producer Ramaco Resources Inc., speaks with S&P Global Commodity Insights Senior Reporter Taylor Kuykendall about his outlook on the sector.
What advice would you give to a fellow coal executive navigating the volatile nature of markets, given shifting tariffs and other policies we've seen emerge during the Trump administration?
I think the advice I would give would be to -- as painful as it might sound -- is to sort of sit tight. I don't think you'll get much clarity until probably somewhere in the middle of the third quarter or maybe even into the fourth quarter. You've got so many moving pieces going on in [Washington] DC right now, which obviously impacts a lot of things, not just in the US but with what's going on with China in terms of steel demand or contraction of steel production over there. That's still pretty much a gray box. I don't know that there's too much clarity, although I think they want to reduce steel output because they're hearing not just from the US but from a number of other countries that the overproduction of steel to flood markets is no longer acceptable.
The other hope is that India gets itself in gear, and that's been a hope for a long time. How quickly the new blast furnace production that's supposed to be coming online in India really kicks in will be the proof in the pudding. Once it does kick in, obviously, that's going to underpin a lot of additional demand, which will be great for the met coal space. But India is one of those markets, as we all know, you kind of have to see it happen before you can firmly believe it has occurred.
The European markets seem to be picking up a little bit of vigor, and how long that lasts and what happens is anybody's guess. My guess is -- at some point -- you get a resolution of the Ukrainian situation that probably acts as a catalyst in those European markets. When it does, does that imply that Russian coals come back into Europe? Probably not right away. It'd be obviously a major demand driver for steel if there was reconstruction in Ukraine, but that is quite some ways off, both from a geopolitical and macroeconomic standpoint.
What trends are you seeing on the supply side of the metallurgical coal equation?
I think you're going to see a lot more capacity fall off here between now and the end of the year.
We are seeing people in the [metallurgical coal] space go under left and right. Some people who haven't actually declared [bankruptcy] -- they're hanging on by a thread. There are a couple of names I could give you, but I don't want to look as if I'm dancing on somebody's grave. There are some pretty substantial public and private entities that are really hanging on in the red right now.
I don't think you're going to see a lot of -- certainly before sometime in 2026 -- new met coal production coming into the space.
I do think you'll see some declines. We did a pretty intensive analysis. Our estimate was that there's probably as many as 5 million-7 million additional short tons in the eastern US that might fall out of the market.
What do you see in terms of the future of the coal trade between the US and China given the recent trade dispute and tariffs?
I think there's got to be a relocation of those tons probably into other Asian markets. The high-vol coal markets are going to be very weak, certainly into Asia.
As far as direct to China, [Ramaco] has never wanted to sell direct to China because I don't trust the counterparty risk. We've sold to other Asian countries. We've sold to Indonesia. We've sold to Japan. We've sold to India. We've sold to [South] Korea, pretty much up and down the Far Eastern markets. But as far as we're concerned, if we wanted to sell anything that was destined to China, we would have an intermediary buy it from us and not take the direct exposure ourselves.
I think the geopolitical situation has just put a coda on that -- that it's even more important to make sure that you've got your counterparty risk covered.
What do you see as some of the biggest opportunities for US coal producers in terms of export markets?
I think geographically, it's not going to be an even recovery. Every major developed and developing country with steel production has had the same issue with dumping of Chinese steel. That has to find some resolution either from China itself in terms of cutting back production or in terms of tariffs, where the bigger countries are able to put a tariff in place to withstand having China flood their markets and a lot of that will then go to the secondary markets.
In terms of the rest of the year, I would again say it's probably too early to dictate where all these flows will end up, but the high-vol tons that would otherwise be going to China will probably find a home in India at a much lower price.
The European markets may pick up a little bit if that can stabilize itself.
Even if they start to allocate EU funding toward defense, that probably has a positive implication as far as met coal is concerned. Certainly, reconstruction in Ukraine would be a huge steel boom. In Ukraine, there's starting to be a little bit of a pulse [for met coal demand from steelmakers].
Some of the other mills in Europe are similarly coming back into the market a little bit better than they did last year. I think that might be the bright spot for the balance of the year.
Are you seeing, or do you expect to see, any big changes to the ease of domestic mining given recent executive orders and other presidential actions supporting the industry? Will there be new investment in US met coal mines?
I think fundamentally, what these orders were all about were to sort of change the narrative around coal so that it's no longer inappropriate for a utility that's got idled coal capacity to turn it back on. They probably would get a thumbs-up for that.
In terms of increasing production, I get asked this question a lot, and they say, ‘Well, did the executive orders increase production?’ I said, ‘Well, you're only going to increase production to meet demand.’ The demand factor is really what's critical, certainly, in the met coal space.
I think the executive orders, in summary, are absolutely a strong boost for the industry. But how does it play out in the next six months? My guess is on the margin, it's very positive. But from a longer-term perspective, they've got a few other shoes that have to drop.
Next interview
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Dulguun Baasandavaa, Mongolian Stock Exchange
Dulguun Baasandavaa, Mongolian Stock Exchange Interim CEO
Mongolia is the largest supplier of coking coal to China, the world’s largest consumer. The country has quickly assumed the role of China’s top traditional supplier, overtaking Australia, the leading exporter. The Mongolian Stock Exchange plays a critical role in physical coal trading for Chinese markets, and its plans for coking coal futures may become a game changer for global coal trading.
Dulguun Baasandavaa, interim CEO of the Mongolian Stock Exchange, speaks with S&P Global Commodity Insights Managing Editor Rohan Somwanshi and Senior Price Reporter Olivia Zhang on Mongolia’s coal expansion plans, dependency on China, India as a potential export market and Mongolia’s emerging role in the global coking coal trade.
What is the current level of coking coal production in Mongolia? Are there any key expansion plans over the next three to four years?
Mongolia’s coking coal production volume reached about 85 million mt in 2024, and it is expected to increase in the coming years as the coal industry plans to boost production in the country.
There is definitely a lot of potential for coking coal in Mongolia in terms of expansion. We are inviting potential investors to explore, as only a small percentage of our land has been surveyed. Right now, geological surveys are limited and below expectations. While many mining companies operate, improving the quality of coal for coking purposes requires investment in coal washing facilities. If that happens, the overall volume of coking coal will increase without the need for additional mines.
China plays a big role in Mongolian exports, but is there growing interest from other countries? Do you see Mongolia's exposure to these markets increasing in the foreseeable future?
It all depends on coal prices. If prices rise, as we have seen from 2021 through 2024, there is potential. However, if prices fall to pre-COVID levels, the chances for Mongolia’s shipments beyond China or Russia diminish. Our aim is not to reach many countries but to achieve the highest profit margin per metric ton of coal, which largely depends on transportation.
Do you see moving coal becoming easier in the future? Physically moving coal is Mongolia's biggest challenge. If prices are right, do you see any opportunity to move coal out of Mongolia to ex-China markets?
We observe that moving coal is becoming easier in Mongolia and China. We are thankful to our Chinese partners, as we are building a railway connecting Mongolia's largest land port, linking Mongolian and Chinese railways. This will increase coal transportation volumes by 15 million mt/year.
Will these upcoming railway upgrades boost Mongolian coking coal exports to China this year and in the future?
I definitely hope so. If we perform well and deliver as promised, we can surpass 80 million mt in exports to China in 2025.
India is the largest seaborne coal importer, and its demand has skyrocketed in recent years. Is it profitable for Mongolian coal exporters to ship coal to India?
India has shown interest in purchasing Mongolian coal. However, I do not know and cannot promise how they will transport the coal -- either through China or Russia -- and whether it will be feasible by the time it reaches the nearest Indian port. We do not have those calculations yet.
Furthermore, selling coal to India will depend on arbitrage. If prices at Indian ports exceed those at Chinese ports, trading companies will likely pursue Mongolian coal. I can see such events happening, as coal prices are declining significantly and oil prices also drop, potentially reducing transportation costs. I think there is room for traders to not just play in the Indian market but also globally due to falling transportation costs and shifting economic dynamics.
What role does the Mongolian Stock Exchange play in shaping the future of Mongolia's coking coal physical trade? Does it plan to introduce futures coking coal contracts?
We aim to be an exchange with top international standards, guaranteeing quality, transparency and fairness. Our commodity trading platform serves all participants, whether domestic, Chinese or global companies. The exchange is open to all participants interested in Mongolian commodities.
Regarding coking coal, the MSE facilitates trading of mining products through spot and forward contracts. As commodities trading began just two years ago in Mongolia, our focus is on building a strong foundation with a few financial institutions for the first time to build a reputation.
As the market matures, we can introduce futures contracts. Personally, I'd rather say that in three years' time we may see the introduction of coking coal futures.
In the meantime, we are focusing on resolving existing smaller challenges in the markets before introducing futures so that the buyers and sellers are satisfied with the current instruments, and then there will be a clear line moving forward in introducing futures.
Next interview
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Johnson Gui, HiQLCD
Johnson Gui, HiQLCD CEO
China’s decarbonization efforts have taken a backseat in its domestic steel sector, until now. Recent policy shifts have added pressure on the domestic steel industry to accelerate its decarbonization strategies and align them with the country’s broader climate goals.
To help China’s steelmakers with carbon accounting, life cycle assessment companies have started playing a major role, allowing them to measure and standardize every step over the life cycle of steel produced.
China’s HiQLCD, a life cycle assessment company, has been working with several Chinese steelmakers, providing digital solutions that help them address their sustainability challenges. Rohan Somwanshi, Jia Hui Tan, Nabilah Awang talk to HiQLCD CEO Johnson Gui, who spotlights China’s journey in steel decarbonization and how LCAs are increasingly becoming important.
What challenges are Chinese steelmakers facing in their decarbonizing progress? Are there any substantial obstacles anticipated?
Today, a global trade shift has been seen from price competition to carbon competition. As China uses a lot of blast furnaces, which are coal and coke-dependent, the steel industry in the past was able to manage at this level of costs. But if we switch to the current competition scenario, then you will have a drawback. Because a coke plant or blast furnace will emit a lot of carbon emissions, almost three times more than the electric arc furnace route.
At a time of rising tariffs, I think Chinese steelmakers or manufacturers face mounting challenges from such market access restrictions, carbon compliance barriers like CBAM [Europe's Carbon Border Adjustment Mechanism], making transparent, internationally credible carbon data crucial. Without robust, verifiable datasets, Chinese steel is being sidelined in premium markets.
How do you think China is defining its journey toward steel decarbonization?
I think China is pursuing a two-pronged strategy, aggressively upgrading technology, including hydrogen-based steelmaking. There are some sector leaders or industrial leaders who have these pilot projects.
Currently, they are in a lab-testing mode. Baosteel has already invested billions of Chinese yuan RMB in their Zhanjiang factory, and they have another pilot test in Xinjiang. But during the route to use hydrogen ultimately, steel companies are using direct reduction iron or using natural gas to replace coal or coke oven gas, for example. So, I think it's a long trip to achieve ultimate decarbonization. It's also about how we produce this hydrogen using green electricity or using water waste.
As the steel industry has been asked to enter into the national emission trading system, it will need to buy carbon credits for emissions. This will also change their cost structure step by step. You also need to assess the cradle-to-grave carbon footprint. For example, more Chinese steel companies are asking their suppliers to produce or supply green iron ore or use greener lubricants.
How is China’s steel industry going to manage its decarbonization efforts, at least in the short term?
In the long run, carbon costs will appear within product costs, and the percentage of this carbon cost will increase. For example, we estimated that for Baosteel’s hot rolling coil, if the carbon tariff equals $100/mt in 2035, 40% of the cost will be carbon cost. In the short term, the industry is prioritizing its energy efficiency because if you consume less energy, the direct cost will decrease.
China’s government in the past asked all companies to go digital. I think most Chinese steel companies have gone digital and are deploying carbon digital management, and this is a starting point.
To get an accurate decarbonization strategy, companies should use this data to guide how they can buy green electricity first or use technology first. Baosteel, about two years ago, got the real-time carbon footprint labeling system. And this year, this digital solution is being copied to Angang and Shougang. Now these two big steelmakers will also have their real-time carbon tracking. They can check the carbon footprint of every specific coil and its carbon distribution.
On the downstream side, this trend can be seen at least for the high-end Daimler cars or electronic products like Apple, where they want to produce carbon-neutral iPhones and watches. So, I think the demand for low-carbon steel is also increasing.
What challenges do you anticipate Chinese companies may face navigating CBAM?
I think CBAM is not only reporting for disclosure. In 2026, exporters or importers have to pay CBAM costs. I think for this kind of monitoring or disclosure system, you need to meet the expectations of the European Commission. And CBAM demands high transparency, detailed life cycle reporting and a strict methodology alignment. The Chinese companies are racing to close the gap. Many steelmakers use digital platforms or AI technology, which empowers, especially, small and medium steel companies, to make accurate carbon calculations first.
In China, we have hundreds of types of coal. Every day, steel companies are simulating the cost of coke plant on what kind of coal needs to be purchased at the cheapest rate. In the future, this model will be changed.
For example, you would need to consider carbon tariffs and carbon trading costs because cheap coal may add to higher carbon footprint. So, I think internally or externally, it will change how companies manage their operations.
What is the current viability for low-carbon steel transition in China? And what sort of timeline are we looking at for this sort of green steel journey? What else is needed for a wide-scale adoption of low-carbon steel in China?
Leading companies are already piloting low-carbon steelmaking. About 50% of Chinese steel companies have even registered their low-carbon steel brand. Like Baosteel, they have a brand called BeyondEco. For the BeyondEco trademark, the steel has to have at least 30% lower carbon emissions. More customers are actually purchasing such type of low-carbon steel. I think today, already different steel companies are already producing low-carbon steel. But for a broader commercialization of low-carbon steel, that will happen in the next three years.
But I think low-carbon steel should be comparable, consistent and the process should be transparent. So many companies have registered their low-carbon steel trademark, but is the product quality comparable? Do they use the same methodology? I think first, we need to finalize and adjust this calculation methodology using the background database. I think beyond technology, trusted granular Chinese carbon data is essential to unlock market entry, labelling, even financing, trade acceptance and policy incentives. I think in China today, some companies or even industrial associations also want to develop this kind of index or an indicator for low-carbon steel.
How has the Chinese government's inclusion of the steel industry in the ETS impacted its demand for carbon accounting?
All governments want the manufacturer to pay the tariff locally. So, the government wants to arrange this kind of carbon allowance, with the money to invest in green steelmaking again. This is a key point. But secondly, I think you can also see the Chinese government's ambition to push all industries toward sustainability. Steel is a heavy industry and emits a lot through the traditional blast furnace route. More importantly, it will influence a lot of downstream industries, such as real estate, automobiles, home appliances, which use steel products.
The ETS inclusion also shows China’s ambition to reach carbon neutrality. ETS has pushed steelmakers to institutionalize carbon reporting beyond internal or CSR needs. If you need to participate in the ETS and reduce your costs, then you have to do granular carbon management and identify how to reduce emissions.
Those steelmakers not using compliant technology and do not pay environmental costs will wither away. The market share will then be centralized to high-end steel products. And I think this is also what the Chinese government wants.
What role are life cycle assessment companies playing right now in the steel decarbonization journey?
For measuring carbon footprint, you want to have accurate or acceptable results for different stakeholders. That's why life cycle assessment today is globally recognized as a methodology or a tool to assess the carbon footprint of products.
LCA uses a common language to communicate steel products’ carbon performance or environmental performance. Steel companies are using LCAs for strategic planning, not only to meet compliance, but also to inform product design, process optimization and green supply chain management.
Secondly, it's like a scenario analysis where companies model different raw materials, such as scrap ratios, hydrogen versus coke, using life cycle assessment to predict emission reductions and cost impact. So, companies are using this kind of scenario analysis to guide what would be their future strategy or purchasing model.
Thirdly, third-party verification is also done, such as the Chinese government is increasingly relying on LCAs to validate claims around green material procurement or for low-carbon steel markets.
Next interview
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Dino Otranto, Fortescue Metals
Dino Otranto, Fortescue Metals CEO
Fortescue, the world’s fourth-largest iron ore miner, is working toward an aggressive “real zero” target of eliminating Scope 1 and 2 emissions from its Australian iron ore operations by 2030.
Dino Otranto, CEO of Fortescue Metals, talks to S&P Global Commodity Insights Senior Editor Anthony Barich about key industry themes, including how China’s decarbonization path sets the tone for the iron ore industry’s future and the company’s green ambitions.
Commodity Insights analysts have said that 2024 was the final year China's annual steel production breached the 1 billion mt level and it will continue trending down going forward. What are your thoughts from the industry’s perspective regarding China’s falling steel demand?
Since June last year I've been getting this question, because I think sometimes the industry at large has expected something a bit quicker, more rapid, more of a panacea-type approach to China's stimulus. I don't think that's the case anymore.
Premier Li Qiang stated it most eloquently when he said that after years of absence, the government is now actively supporting an easing monetary policy environment to stimulate all sectors of the economy mid-to-long term. I'm not expecting lots of cash being thrown around to support the industry. They're taking a much, much longer-term view now, and this has largely been accelerated with some of the speculation around tariffs.
Do you see any challenges for China’s steel industry due to the tariffs, or more broadly?
The more complex the market is, the more diverse it is, and the more difficulty there is for it to be disruptive. The key uncertainty everybody is talking about is the tariff situation. What we're hearing on the ground here in China is that after what I call President Donald Trump's first round [as president], China has certainly understood its exposure and diversified itself around that. So we're not feeling significant pressure from any of the steel mills around them curtailing production or anything else. In fact, it's more the opposite -- more domestically-focused policies where we're seeing the government stepping back in with support for economic activity, which will continue to drive the iron ore price to be sustained at current levels in the short term, which isn't a bad number.
We don't see any major disruptions on the downside or even on the upside. They diversified their steel exports away from the US several years ago, but they were not significant volumes anyway. The majority of China’s steel production is for domestic consumption. Most of its steel exports go to Southeast Asia, the Middle East, and to a lesser extent, Africa and Latin America. The flows to the US are not even in the top five destinations for Chinese steel.
What does that mean for iron ore demand in the foreseeable future?
The iron ore price has been at current levels [as of the end of March] for months now. Ever since the media started reporting on the downturn and the speculation on China's structural reform, we have just not been hearing it on the ground in China, and we're not seeing it being reflected in prices. In fact, it's probably the opposite.
What we're seeing here is structural, what I call a “reform of the market” going on, where the market is maturing, you're still seeing property develop in the Tier 2 and Tier 3 cities. There is an explosion in investment in renewable energy transformation -- for instance, $1 trillion last year, the numbers are just gobsmacking. The automotive investment and the high-speed rail from east to west is also a pretty significant thematic that's coming up, driving steel and iron ore demand, along with increased military and defence spending. All of those sectors for us mean that it's a much more mature and sophisticated market versus just wholly being about property growth. So you are going to see largely a more plateaued market here in China [longer term] versus a depressed market in the midterm.
China’s steel market is still flowing and liquid -- port inventories are at normal levels within reasonable fluctuations, and our product mix is moving quite well. We just don't see the doom and gloom that a lot of analysts have forecast, to be completely honest, and it's evident with the price. Steel mills have been making money in the last four to eight weeks [as of March 27]. There's certainly no evidence that they're slowing their production.
How do you see China’s path to decarbonizing its steel industry?
Every other segment here in China is essentially on track to decarbonize, but the steel industry is going to struggle.
China’s current plan is to use high-grade ore out of Simandou, which then gets beneficiated in Saudi Arabia and turned into a metal with gas to make hydrogen, which will still have a carbon footprint, lower than coal, but still has a carbon footprint. This is what's called DRI [direct reduced iron], then that goes into the steel mills in China. That's well and good, but it's not a green product for starters, and there's not enough high-grade iron ore available on the planet to be able to feed that supply chain because, at the moment, it only uses a very, very high-grade ore, which is not Australian, by the way. It is ore from Simandou, some of the higher-grade small volumes coming out of Europe, for instance, and Canada.
Australia needs to reestablish itself as the supplier of choice, but what I'm hoping to get off the ground in Australia is a downstream product, value-adding in Australia, making a 95% metal that goes straight into China.
Australia has the opportunity to jump in, but we need it to step up to the plate, as does China. At Fortescue, we're building the Christmas Creek Green iron facility, which would alleviate a lot of the concerns about green iron technology. But that's just a drop in the ocean. The next step is this mega-scale project between China and Australia that we're anticipating. We have to build huge amounts of solar and processing infrastructure in the Pilbara to export a much higher grade downstream made-in-Australia product to China. And the Chinese want it.
This year, we'll have 1,500 mt/year of green iron production. We've been very vocal about our current studies around the 1 million mt opportunity, which is next, and our aspiration is to get to 100 million mt/year -- essentially getting out of the iron ore game and getting into the green metal game in Australia. But at the moment, we're not going to release the timing for that until we've got a bankable project plan that we will release.
At China's "Two Sessions" gathering, Premier Li committed to a 3% reduction in energy intensity this year, including the steel industry, which signaled that it may not meet its energy and carbon intensity five-year plan targets. How do you see this situation on the ground in China?
What we're talking about in China is peak carbon by 2030 and then a reduction down to 2060, which will have some ebbs and flows. But they invested $1 trillion last year, and then $1 trillion a year before in more than 350 GW of solar and wind capacity in this country. That eclipses all of the energy transition investment around the rest of the globe. So if they're running at 3% or 4% as an energy reduction target, for me it's immaterial.
With the mass of material that's being installed in the ground here, everyone around the world should be looking at China and how they're doing it because they're doing it economically. The landing solar price is now cheaper than coal.
What does this mean for the iron ore market?
That's the key reason [we were in the China Development Forum]. We're talking up the green metal supply chain opportunity between Australia and China. We announced that opportunity [there] a year ago, and a year later, the interest and partnership opportunities are immense.
We've met with solar and wind suppliers and signed contracts with solar suppliers to help Fortescue decarbonize, which in turn helps decarbonize the steel industry.
The next big thing is getting Australian iron ore turned into metal in Australia and sending that to China, and there's huge interest in doing that. The steel industry itself is one of those really difficult-to-abate sectors, along with cement, but China's energy transition is going at a huge rate. It's unbelievable.
Everyone is talking about it [at CDF]. It's part of the new three progressive forces that Premier Li again re-emphasized on March 24, around high-quality manufacturing -- basically using science and technology, the green transition, and big data applications of AI -- to modernize the economy.
First interview
Matt Latimore, M Resources Founder and President
Australia’s M Resources created a buzz when its joint venture with Golden Energy completed the $1.65 billion purchase of a key Australian metallurgical coal mine in September 2024.
Matt Latimore, founder and president of M Resources, speaks with S&P Global Commodity Insights Senior Editor Anthony Barich about how he sees key international macro drivers impacting metallurgical coal markets, including policies in the US, India and China.
What are the key opportunities for the Australian metallurgical coal industry going forward?
The seaborne metallurgical coal market is anticipated to grow substantially over the coming years, by around 50 million mt/year in 2035. This growth will be largely attributed to the significant increase in the construction of blast furnaces in India and Southeast Asia.
Australia’s geographical proximity will be advantageous, optimizing trade flows in the region. Australia also has numerous grades of metallurgical coal, with a stable and proven supply, earning it a positive reputation in international trade markets.
How much longer until coking coal prices are expected to start recovering, and what factors could impact this?
We are already starting to see some positive improvements in steel prices globally. Regionally, some are rising faster than others, with a stronger steelmaking complex boding well for the coal industry.
Regional protectionism in India, Europe and several other places will likely bolster their respective domestic steel production and positively counter steel imports from China.
In terms of supply, it is clear that numerous coal operations globally will be making cash losses at current prices. It is expected that there will be associated production cuts and pullbacks, particularly for higher costs and smaller producers, with higher strip ratios in open-cut or continuous miner operations underground.
Lower-quality producers with smaller margins will also likely make earlier decisions to reduce costs.
As demand improves, production will increase, and supply will again come under pressure, and we can expect to see prices rebound. We anticipate seeing this change in market dynamics toward the end of 2025.
What will happen if India’s coke quantitative restrictions (also known as quotas) get extended past the initial period of January-June?
The coke quotas are good for enhancing domestic production and will improve direct demand for metallurgical coal.
India reducing the amount of imported coke will mean that it will need to produce more coke within the country, and that will require greater imports of metallurgical coal.
Are US export flows expected to adapt more to new markets (Asia) during this low pricing environment and amid slowing European demand?
US exports to Asia have been increasing steadily over recent years, particularly to India and Southeast Asia, where the proportion of imports from the US has risen quite sharply.
The US has a variety of metallurgical coal “qualities” that are very useful in coke making, particularly the high-fluidity coals that help binding characteristics in the blend. Additionally, the US has been a source for the diversification of coal imports.
The ongoing challenge with US imports to Asia is the question of freight and who pays the cost differential. At low prices, especially loss-making prices, this becomes a harder proposition for both parties to bear and remains an ongoing question for steelmakers.
How could China’s imposition of a 15% tax on US coal imports reshape global trade dynamics?
Geopolitical tensions between the US and China continue to create market uncertainty. China’s imposition of the tax on US coal effectively eliminates a terminal market and will intensify competition in other markets.
The concern around the US government’s proposal of a service fee of up to $1 million on Chinese-owned ships is also providing some uncertainty for steelmakers regarding freight costs, in addition to the normal differences based on distance referenced above.
Freight costs are at historically relatively low levels. Rates will be determined by usual factors such as the number of new builds and scrapping, though importantly, the amount of global seaborne trade and protectionist measures could have an impact on this and resultant freight rates.
In the short term, there could be various distortions in the market if one region, such as the US, imposes restrictions on Chinese ships -- until trade flows readjust to non-Chinese-owned ships servicing affected areas and Chinese ships servicing other areas.
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Interviews: Rohan Somwanshi, Anthony Barich, Olivia Zhang, Taylor Kuykendall, Jia Hui Tan, Nabilah Awang
Editing: Lead Editor: Barbara Caluag. Other editors: Sivassanggari Tamil Selvam, Rizwan Choudhury, Sarah Mishra, Adithya Ram, Mriganka Jaipuriyar