Global energy, metals and mining research and consultancy firm Wood Mackenzie has indicated in its latest coal outlook that 17 percent of forecast US coal production for 2015, amounting to 147 million mt, is at risk of idling or closure, as many mines find that they are unable to cover their operating costs plus sustaining capital in the current low price environment. 58 percent of this total output consists of metallurgical coal.
According to the consultancy firm, for prices to rise, either global demand for coal, largely driven by the steel and power sectors, must increase, or the supply of coal must decrease. Wood Mackenzie believes that the only practical way for the market to rebalance is to cut production. This will need to happen sooner rather than later, as the losses these mines are generating cannot be sustained.