Australia, the world’s top seaborne coking coal exporter, faces a fundamental dilemma: how to satisfy surging Indian demand for steelmaking coal while Queensland’s mining royalties, seen as punitive by producers, discourage new investment. The future of the global coking coal market hangs on the moves of two key players—India as the demand engine and Australia as the supply linchpin.
Australia accounts for roughly half of the global seaborne coking coal trade. In 2025, its export volumes reached 148.4 million tons. But the country’s dominant position is being tested by rising production costs and regulatory headwinds, even as India—already consuming about a quarter of the world’s seaborne coking coal—plans to more than double its steel output from the current 163 million tons to some 400 million tons by 2035, driven by urbanisation and industrial expansion.
India’s domestic coking coal resources are limited, with less than 5% of its current output suitable for steelmaking. This means the country must rely heavily on imports. Australia is seen as the natural supplier to meet this growing need, provided its mining sector can deliver the necessary volumes.
India’s steel ambitions drive demand
India imported 83.17 million tons of coking coal in 2025, up from 74.55 million tons in 2024. If India continues to increase steel production by 20 million tons per year over the next decade, it will require about 15 million additional tons of coking coal annually, mostly from imports. This sustained pressure on global supply is pushing Indian buyers to diversify their sources, including increasing imports from the United States, reducing their dependence on Australia.
According to Reuters, coking coal prices in Australia have stabilised since mid-2024 after a period of high volatility, which has attracted producers. However, the cost outlook remains challenging. BHP Group, together with its partner Mitsubishi—one of the largest coking coal exporters—expects production costs per ton in Queensland mines to range between $116 and $128 in the fiscal year ending June 30. Over the nine months through March, the average price per ton of coking coal was about $200.12.
Australian producers under pressure from royalties
In July 2022, the Queensland state government raised coal royalties. At current prices, royalties can reach 30% of costs above $225 per ton and 20% for prices between $175 and $225. Producers argue that these high royalty rates complicate the justification for new investments in exploration and development. As a result, most capital spending is directed at extending the life of existing mines rather than greenfield projects.
– Australian producers are facing cost pressure from royalty fees, delays in obtaining permits, and pressure from activists – said Jakub Szkopek, an analyst at Erste Securities, in an interview with WNP.
BHP and other companies have stated they have no plans to significantly increase capital expenditure in Queensland mines. In this environment, mining firms are weighing whether to maintain current profitability by accepting higher royalties and stable margins, or to sell off assets. The development of the coking coal market will largely depend on how quickly India translates its plans into actual steel production increases, and how the global market reacts to regulatory decisions in Australia.
Outlooks suggest that India’s demand and Australia’s production capacity will remain the main factors shaping the long-term strategy of coking coal suppliers. Rising steel consumption from infrastructure, construction, and automotive sectors will continue to drive demand for coking coal.
Źródło: wnp.pl, Fot. ANGHI / Shutterstock
