South Africa to Australia: Why coal profits are surging during Iran war | Energy News
Global Energy Crisis Drives Surge in Coal Usage Amid Ongoing Conflict
Crude oil and natural gas supplies have faced significant disruptions globally due to the ongoing conflict involving the United States, Israel, and Iran, leading to an unexpected boom in the coal sector.
Thungela Resources, a thermal coal producer based in South Africa, reported this week that its half-year profits have doubled, driven by increased demand for coal as countries seek alternative energy sources amidst the crisis. Despite coal being one of the dirtiest fossil fuels, known for its contribution to air pollution and climate change, its low cost and relative abundance have made it an attractive option for nations facing energy shortages.
In recent months, many countries, particularly in Asia, have delayed or reversed commitments to reduce coal production. The World Bank noted that global coal consumption was already on the rise in 2025, driven in part by the energy demands of artificial intelligence data centers in the Eurasia region and the United States.
The energy crisis was exacerbated when Iran closed the Strait of Hormuz, a critical shipping lane for approximately one-fifth of the world’s oil and liquefied natural gas supplies, following military actions that began on February 28. Ongoing negotiations aim to reopen the strait, but its closure has significantly hampered oil and gas supplies and led to soaring oil prices. Many countries have turned to coal as a more readily available, albeit pricier, alternative.
Asia, heavily reliant on energy imports from the Gulf, has been particularly affected. In 2022, the region received around 82 percent of its oil and gas shipments through the Strait of Hormuz, according to the U.S. Energy Information Administration. Notably, Iran’s military actions have also interfered with energy infrastructure in Gulf nations, with Qatar experiencing substantial disruptions to its liquefied natural gas exports due to drone strikes.
As a result, several Asian countries have reported increases in coal-fired electricity generation. Japan is lifting restrictions on older coal plants, while South Korea is postponing plans to close coal facilities. Bangladesh, after briefly imposing power cuts, is ramping up coal-generated electricity. Countries such as Thailand, the Philippines, and Vietnam are also increasing their reliance on coal amid dwindling natural gas reserves.
Data from the National Electric Power Regulatory Authority in Pakistan indicates that electricity production from imported coal surged by 90 percent in July compared to the same month last year. Both China and India, which consume a combined 70 percent of the world’s coal, are increasing their coal outputs to meet growing demands.
Indonesia remains the world’s leading coal exporter, followed by Australia and Russia. In March, Indonesia amended its plans to curb coal production to capitalize on rising prices, which have reached $131.85 per tonne, up from $102.20 the previous year. Thungela Resources has also reported a significant increase in production and profits, with its thermal coal production rising by 38 percent in the first half of this year.
The current energy crisis raises questions about the global commitment to transitioning away from fossil fuels. Despite pledges made by over 40 countries during the COP26 climate summit in 2021 to reduce coal usage, the ongoing conflict has hindered progress, particularly in regions lacking adequate renewable energy capacity. Experts warn that countries such as Bangladesh, which invested heavily in coal infrastructure, find it easier to revert to coal when gas supplies are disrupted.
Analysts suggest that while some regions may see temporary increases in coal usage, these may be offset by longer-term declines elsewhere. For instance, China’s coal production has decreased as the government tightens regulations following a deadly mining accident. There is also optimism that the disruption of fossil fuel supply chains could accelerate investments in clean energy alternatives.
Energy transition experts argue that countries in Asia must expedite their shift towards clean energy and electrification to mitigate the effects of future global crises.
