More Investment Allocated to Coal MiningBy Paloma Duran | Wed, 08/03/2022 - 18:40
Now that the pandemic no longer poses a high risk to mining operators and investors, t a surge in mining projects around the world has materialized. Although analysts expected that more projects would be created in line with the clean energy transition, coal projects are receiving significant amounts investment. Mexico is not the exception. Recently, the Mexican government announced that coal will continue to be a staple of the country’s power production.
According to new data from Industrial Info Resources (IIR), there are currently 4,790 metals and minerals projects under construction around the world, with a combined investment of US$443 billion. In addition, 10,586 projects worth US$1.11 billion are in the planning stage. Joe Govreau, Vice President of Research, IRR, noted that the 8 percent increase in new projects is influenced by the slowdown of the COVID-19 pandemic.
However, it seems that mining companies and investors are not promoting projects that will boost global decarbonization plans, since there are more investments in coal projects than in copper, a key metal for the green transition. According to experts, 19 million tons of copper must be supplied if the world is to gian the resources to reach net zero by 2050.
There are currently 708 active copper projects, with construction to start in 2022 or planned to start in 2023, IIR reported. The combined value of these projects is US$68.5 billion. In copper projects, Mexico ranks tenth among the countries with the highest CAPEX, reaching US$672 million.
Meanwhile, there are 1,863 coal projects around the world, worth US$80.8 billion. Govreau explained that coal production increased significantly in 2021 due to the growing demand for power production and steelmaking. Govreau highlighted that Asian nations are investing significantly more in coal mining and even building more polluting coal power plants rather than phasing them out. According to experts, coal is an attractive investment as it is currently a cheap and stable alternative to generate electricity.
The Mexican government was recently criticized for continuing to buy coal and investing in new plants. Miguel López, Deputy Director of Contracting and Services, CFE, defended the government's decision by saying that the state utility has been buying coal since the 1980s. In addition, he highlighted that the percentage of electricity produced with coal is only 4 percent, which generates minimal pollution in the country.
Last week, CFE signed 52 contracts worth MX$3,845 million (US$189.36 million), which are expected to supply 3.18 million tons of coal in the next two years. For the period from 2020 to 2021, CFE singed 60 contracts with medium and small-sized coal producers in Coahuila, totaling 1.5 million tons of coal worth MX$1.5 billion (US$73.79 million).