2023-11-14 15:30:31
The deal by a Glencore-led consortium to buy Canadian miner Teck Resources’ steelmaking coal unit for $9 billion highlights the commodities giant’s bet on the role of coking coal in the transition to coal. ‘green energy.
Here are some details and context:
What is coking coal?
Also called metallurgical coal, it is mainly used to produce the coke needed to make iron and steel. Coke is fed into a blast furnace with iron ore and limestone to produce steel.
What is its role in the ecological transition?
Renewable energy infrastructure will require iron and steel for wind turbines and solar panels, for example.
Could coking coal be replaced?
Efforts are underway to use cleaner ingredients, such as hydrogen, to make iron and steel, but there are no commercially viable alternatives to coking coal yet.
The costs
Coking coal currently sells for around $300 per metric tonne, while Newcastle thermal coal – used for electricity generation – sells for $120 per tonne.
Why Teak?
According to its website, Teck is the world’s second-largest exporter of seaborne steelmaking coal.
Teck expects to produce between 23.0 and 23.5 million metric tons of coking coal in 2023, according to its third-quarter results, while Glencore expects production of 10 to 12 million tons.
Teck produces coking coal at four sites in western Canada, while Glencore produces it in Australia; the agreement therefore allows Glencore to benefit from geographical coverage to supply its customers.
The deal is also expected to pave the way for a possible spin-off of Glencore’s coal business. (Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Arpan Varghese and Jason Neely)
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