China coal production costs are estimated on a full-cycle basis in this data-file, averaging $75/ton across large, listed miners, with assets in Shanxi, Inner Mongolia and Shaanxi. The costs are increasing at $1.3/ton/year, as mines move deeper and into smaller seams. Smaller regional miners have 1.5-2x higher costs again, and will hit LNG price parity around 2030?
This data-file estimates the full-cycle costs of Chinese coal production, by aggregating the public market disclosures of China Shenhua Energy, China Coal Energy and Yanzhou Coal, all three of which are listed in both Hong Kong and Shanghai.
Specifically, to calculate full-cycle costs, we have aggregated unit costs reported by each company. On top of this, we require a 10% ROA on coal mining segment assets, as our way of reflecting capital costs. A 25% income tax rate on this economic return is also added. And we have added in relevant transport and G&A costs. These numbers can be compared and contrasted with our coal mining economic model.
China coal production costs comprise c$20/ton of capital costs, c$10/ton for labor, $10/ton for transportation to Eastern markets, $5-10/ton for each of past capex depreciation, washing/processing at the surface, income taxes, energy/materials; with smaller charges for maintenance, mining rights, G&A and compensation for subsidence, remediation works or other environmental line items. Data are aggregated in the file, with a separate tab for each company.
The average full-cycle cost for these large producers is $75/ton in 2021-23. Costs have generally been rising, at an average implied rate of $1.3/ton/year, as the industry moves into deeper resources and thinner seams. However, we think that the costs of smaller regional miners can be 50-100% higher again, for the marginal cost of Chinese coal.
These numbers are crucial to calibrating our cost curves and inform our 2025-30 global energy supply-demand model,ย 1700-2050 supply-demand model, China energy model, globalย electricity supply-demand models,ย coal supply-demand models,ย solar supply-demand modelsย andย gas supply-demand models.ย