Changing Government Policies Are Supporting The Coal Mining Industry

The global coal market was valued at around $358 billion in 2019. It is expected to reach around $338 billion in 2022 at a compound annual growth rate (CAGR) of -2.0%. Despite the declining growth rate, the coal market has seen tremendous growth since the historic period between 2014 – 2018, when it declined at an annual rate of -11.7%. Faster growth of the market in the forecast period than in the historic period can be attributed to the government policies that support the coal mining industry and coal-fired power generation. Governments are providing subsidies and encouraging foreign direct investments (FDI) in the coal mining industry. Currently, G20 governments provide $64 billion worth of subsidies each year to support the production and consumption of coal. The average annual amount spent by G20 governments to help build and sustain coal-fired power plants increased from $17 billion in 2014 to $47 billion in 2017. The amount of government support includes the support through governments’ public finance institutions such as bilateral development banks and export credit agencies investing in coal projects, fiscal support through budget allocations and tax exemptions, and investments through majority state-owned coal mining and utility companies. Japan’s newly released Long-Term Strategy includes plans to increase the use of coal in Japan. In India, the government has allowed 100% FDI in coal mining. These government policies will support the consumption of coal going forward.

Other recent policy changes that will encourage coal mining include the US administration’s withdrawal from the Paris Agreement on climate change in 2017. The administration also repealed the previous administration’s plan to limit carbon emissions, scaled back other coal regulations and ended a moratorium on issuing leases to extract coal from federal lands. As a result of the policy changes, coal production in the USA increased by 3.6% in 2017. This change in administration and environment policies will drive the global coal mining market in the forecast period.

Governments globally are directing their efforts towards favorable mining policies and are amending mining laws as the global mining industry goes through a downfall. In 2017, 61 mining organizations in China, including the China Mining Association, Chinese mining and exploration companies, research institutes and third-party service organizations founded the Strategic Alliance for Development of Green Mining to make practical decisions towards the green development of the mining industry in China.

Another example is the replacement of the 2008 mining policy with the new National Mineral Policy (NMP) by the Indian government in 2019, which pertains to non-coal and non-fuel minerals, and proposes to increase the production of major minerals by nearly 200% in the next 7 years. In addition to favorable mining policies, governments around the world are also creating education and training programs to support the mining industry. In Chile, Programa Mujer establishes recruitment drives for women with no prior working experiences to undertake roles in the operation of heavy machinery in the mining industry, supporting it with a scaled training program.

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