South Africa to Australia: Why coal profits are surging during Iran war

This week, South Africa’s thermal coal producer Thungela Resources said it had doubled its half-year profits as the war has forced more countries to buy the fuel.

Although abundant and relatively cheap to produce, coal is considered one of the dirtiest fossil fuels.

Mining it causes water pollution, and burning it releases enormous amounts of carbon into the atmosphere, which contributes to global warming.

In recent months, several countries, especially in Asia, have reversed or delayed promises to scale back on coal production.

Global coal consumption was already rising in 2025 with the Eurasia region and the US using the fuel to power artificial intelligence data centres, according to the World Bank.

The US-Israel war on Iran has triggered a global energy crisis. Soon after strikes on Tehran began on February 28, Iran closed the Strait of Hormuz, through which about one-fifth of the world’s oil and liquefied natural gas (LNG) supplies were shipped during peacetime.

Negotiations to reopen the strait are ongoing.

Its closure has reduced oil and gas supplies and caused oil prices to soar, prompting many countries to fall back on the most readily available alternative to keep the power on – coal.

While coal prices have also risen, the fuel is still much cheaper than oil – and is more readily available.

No region has been more impacted than Asia, which largely depends on the Gulf for its energy needs. About 82 percent of oil and gas shipments through the Strait of Hormuz went to Asia in 2022, according to the US Energy Information Administration. China, India, Japan and South Korea were the top destinations.

Besides being unable to ship exports through the strait, Gulf countries caught up in the conflict have also been badly impacted by Iranian strikes. Qatar, for example, was forced to declare force majeure on its delivery contracts in March when Iranian drones hit its Ras Laffan oil facility – the world’s largest LNG complex – forcing it offline. Iran’s attacks had knocked out 17 percent of Qatar’s LNG exports by March, state officials said.

Similarly, the United Arab Emirates’s Das Island LNG terminal, Fujairah oil terminal, Ruwais Refinery Complex and other energy sites have been attacked during the conflict. Facilities in Saudi Arabia and Oman have also been hit.

According to an analysis by the energy data company Ember, coal output will rise globally by 1.8 percent by the end of 2026 compared with 2025 in a “worst-case” scenario.

This represents a notable uptick considering that countries are meant to be transitioning away from coal, experts said.

Since the war began, several Asian countries have announced plans to increase coal-fired electricity generation.

Japan has lifted restrictions on older, high-emission coal plants to cope with the energy shocks while South Korea has delayed the shutdown of coal-powered plants it promised to wind down by 2040.

In Bangladesh, the government at first imposed power cuts, closed universities and rationed fuel sales for vehicles before announcing it had ramped up coal-powered electricity generation.

Thailand, the Philippines and Vietnam have also increased coal-powered electricity generation to preserve dwindling gas reserves.

In Pakistan, data from the National Electric Power Regulatory Authority showed that by July, electricity generated from imported coal had risen by 90 percent compared with the same period the previous year.

China and India already consume 70 percent of the world’s coal and are also major producers. In India, where electricity demand is increasing partly due to more intense heatwaves, the government plans to launch several new coal-mining projects that will see global supplies increase by 2.5 billion tonnes a year, according to the Global Energy Monitor.

Germany also said it won’t jeopardise electricity generation because of earlier climate promises it made while Italy has pushed back its coal phase-out plans from late 2025 to 2038.

Indonesia is the top coal exporter by a wide margin, followed by Australia and Russia.

In March, Jakarta reversed previous plans to curb coal production and reduce oversupply in a bid to benefit from the rising prices. Prices were set at $131.85 per tonne in July, compared with $102.20 in the previous year.

South Africa’s Thungela, meanwhile, reported doubled profits from January to June, compared with the same period of 2025, driven largely by higher production from its Ensham mines in Queensland as well as higher demand and higher prices at both Ensham and its South Africa operations.

Production at Ensham rose by 38 percent in the first half of the year – during the peak of the conflict – to 2.2 tonnes, compared with 1.6 tonnes in the previous period.

The company reported 4.80 South African rand ($0.30) in headline earnings per share – or HEPS, a primary metric of profitability used in South Africa. That’s up from 1.92 rand ($0.12) in June last year.

In a statement, Thungela said prices will likely remain high as European and Asian markets prepare for winter.

In 2021, more than 40 countries, including Indonesia and Vietnam, promised to scale back coal use at the COP26 global climate summit. India and China did not sign up, however. Last year, South Korea joined the Powering Past Coal Alliance, which helps coal-dependent economies transition away from the fuel.

However, the Middle East crisis has upset those plans largely because many countries do not have sufficient renewable energy-generating capacity to fall back on, said Nick Hedley, an energy transition analyst at South Africa-based Zero Carbon Analytics.

“For the likes of Bangladesh, it’s easy to lift coal use when global gas supplies are disrupted because the country invested heavily in coal infrastructure in recent decades, and much of that capacity has been sitting idle,” he said.

“Coal becomes cheaper than imported gas when gas prices surge. Importantly, coal still cannot compete with renewables on cost,” Hedley added.

It’s not all doom, however. Analysts noted that upticks in some places are being offset by long-term declines in coal use in places like Europe.

China’s domestic coal production also fell this year as the government tightened oversight following a deadly explosion in May at the Liushenyu coal mine, where 82 people died. Beijing has also made large investments in renewables.

In addition, the breakdown of global fossil energy supply chains could make clean alternatives more competitive and force more countries to invest in them, Hedley pointed out.

“The lesson here is that Asian countries need to speed up their shift to clean energy and electrification to safeguard themselves against future global crises,” he concluded.