There is a habit of thought that has long served Queensland’s coalfields well: the distinction between thermal coal and metallurgical coal, and the belief that the latter occupies safer ground. Thermal coal burns to generate electricity, and electricity generation is a sector being systematically replaced by renewables. Metallurgical coal, on the other hand, does something structurally different — it is transformed into coke, which then performs a chemical and physical function inside a blast furnace that no other material has historically been able to replicate at scale. The argument followed, with reasonable logic, that the energy transition threatened power stations but not steelworks.

That argument has not collapsed. But it has become substantially more complicated.

The same forces that reshaped the energy generation sector over the past decade — rapidly falling costs for renewables, the emergence of viable alternative technologies at commercial scale, and the thickening web of decarbonisation regulation — are beginning to move against the assumptions that underpinned metallurgical coal’s sense of security. Not with the same speed, and not with the same certainty, but with a direction that is no longer deniable. For Queensland, which has built an extraordinary export industry on the back of the Bowen Basin’s hard coking coal reserves, the question of how long that security holds is not an abstract policy matter. It is a question about the fiscal architecture of the state, the livelihoods of tens of thousands of workers, and the economic identity of entire regional communities. It deserves to be examined with the same rigour that the state’s civic institutions bring to other hard questions.

WHAT METALLURGICAL COAL ACTUALLY DOES.

To understand the challenge, it helps to understand the function. The majority of virgin iron is made by loading iron ore and coke — derived from metallurgical coal — into a blast furnace, where the coke is heated at very high temperatures and turns into a gas that reacts with oxides in the melting iron ore, producing liquid iron and CO2. Metallurgical coal plays four key roles in this process: it serves as a reducing agent of the iron oxides in iron ores; it is a fuel that helps reach the very high temperatures needed to melt iron; it is a source of carbon, which is a constitutive ingredient of steel itself; and it provides an ideal physical structure for the blast furnace, with coke layers acting as beds on which iron oxides can lie while enabling gases to pass through.

That final point — the structural role — is one reason why substitution is not simply a matter of finding a different fuel. The modern blast furnace cannot function without a solid, carbon-intensive material like coal. It is this physical necessity, rather than mere habit or economic inertia, that has made metallurgical coal appear more resilient than its thermal counterpart.

The steel sector is currently the largest industrial consumer of coal, which provides around 75% of its energy demand. Around 70% of steel is currently produced using coal-based blast furnaces to make iron, and this accounts for the vast majority of steel-related emissions. Overall, the total emissions from producing steel in plants across the world amount to around 3.7 gigatonnes of CO2 per year, which represents 11% of total global CO2 emissions. Steel is, in other words, one of the most significant industrial climate problems on the planet — and coking coal sits at its centre.

QUEENSLAND'S POSITION IN THE SEABORNE TRADE.

Queensland’s stake in this picture is substantial. Queensland is a global leader in coal exports, supplying almost 200 million tonnes in the 2024 financial year to more than 30 countries, including China, Japan, India, and key European markets. Queensland’s metallurgical coal is an essential input for approximately 75% of the world’s steel mills.

The Bowen Basin, which runs roughly north to south through central Queensland, produces the hard coking coal that drives these export figures. Australia is a market leader in the global seaborne trade of metallurgical coal, comprising approximately 42% of global exports in 2024. Queensland accounts for 57% of Australian saleable coal, and the Bowen Basin is renowned for producing premium, low-volatile hard coking coal. Queensland accounted for around 90% of Australia’s metallurgical coal production as recently as the 2021–22 financial year.

This concentration of production in a single state, from a single basin, supplying a single global industry, is the structure that makes the coking coal question so consequential for Queensland specifically. Other coal-producing jurisdictions have more diversified resource profiles. Queensland’s export wealth is overwhelmingly bound to the continued health of blast-furnace steelmaking in Asia.

The namespace coal.queensland was established as the permanent civic address for this industry — a way of anchoring Queensland’s identity as a metallurgical coal province into a verifiable, onchain layer that can carry the industry’s history, data, and institutional record forward regardless of what the commodity markets do. That kind of permanence matters precisely when the underlying industry faces structural uncertainty.

THE GREEN STEEL CHALLENGE.

Green steel is a term applied to steel produced using processes that eliminate or drastically reduce the use of fossil fuels. The most technically advanced and commercially credible pathway involves replacing the blast furnace entirely with a process called direct reduction of iron using hydrogen — known as hydrogen-DRI or H-DR — combined with an electric arc furnace powered by renewable electricity.

Conventional blast furnaces use coke processed from coal to produce carbon monoxide, which reduces iron oxide in a reaction that releases CO2. Hydrogen direct reduction replaces that carbon monoxide with hydrogen in a reaction that produces water vapour instead of CO2, occurring in a reactor vessel at 600–800°C powered by renewable electricity, bypassing the need for 1,500°C blast furnaces.

The most prominent real-world demonstration of this technology is the HYBRIT project in Sweden. Launched in 2016 as a partnership between SSAB, LKAB, and Vattenfall, HYBRIT plans to replace coal with fossil-free hydrogen derived from renewable electricity. In 2024, the pilot plant in Luleå, Sweden, produced more than 5,000 tonnes of high-purity sponge iron, with zero CO2 emissions. The aim is to enable SSAB to introduce fossil-free steel to the market in 2026.

The process has been validated technically. Research presented at the Swedish Energy Agency shows that the iron produced using hydrogen is not just carbon neutral, but is also stronger and more durable than iron produced with fossil fuels. The challenge now is not technical feasibility at pilot scale but economic competitiveness at industrial scale.

Current green hydrogen costs of between $3 and $6 per kilogram are two to four times higher than the $1.50 to $2 per kilogram needed for competitiveness with coal. Capital costs for hydrogen infrastructure such as electrolyzers and reactors are currently two to three times higher than blast furnace retrofits, and without subsidies or carbon taxes, hydrogen steel remains 20 to 30% costlier than coal-based methods.

This cost gap is the principal reason why the transition to green steel — while clearly underway — has proceeded more slowly than some policy frameworks initially assumed. It is also why, in the near to medium term, Queensland’s metallurgical coal retains genuine market value. The question is not whether the gap will close but when, and how fast.

THE GEOGRAPHY OF DEMAND: CHINA, INDIA, AND THE DIVERGING PATHS.

Global metallurgical coal demand is not a single story. It is, rather, a set of diverging national trajectories whose net aggregate will determine how long blast-furnace steelmaking — and therefore coking coal — remains the dominant pathway to primary iron.

China is the dominant factor. Chinese blast furnaces, which account for over 50% of all ironmaking facilities, are heavily reliant on coal-intensive electricity and are relatively young, around 12 years old on average, so replacing them with more efficient equipment is not economical in the near term. At the same time, China’s trajectory over the longer horizon is one of structural decline in metallurgical coal imports. China’s metallurgical coal requirements are expected to drop significantly as China increases domestic coal production and moves to recycle more scrap steel, further depressing demand for metallurgical coal imports from countries like Australia. China Baowu — the world’s largest steelmaker — has already signalled an intention to exit Australian metallurgical coal, paying substantial sums to settle take-or-pay port and rail obligations it has never used.

India is the counterweight — and the variable most discussed by those forecasting continued demand for Queensland’s exports. India represents the most significant growth market for metallurgical coal, with plans to double its steel output to over 300 million tonnes within the next decade. Unlike China, which is gradually shifting toward alternative steelmaking technologies, India continues to expand its basic oxygen furnace capacity, which requires metallurgical coal as a key input.

But the India thesis for Queensland coal needs qualifying. The increase in metallurgical coal imports into India is expected to be significantly limited by increasing use of green hydrogen in its steel industry, especially after 2030. India’s energy security concerns are likely to steer it towards making steel using domestically produced green hydrogen as costs fall. India’s Mission Coking Coal aims to more than double domestic metallurgical coal production to 140 million tonnes per annum by 2030. In parallel, Bloomberg New Energy Finance has noted that India’s steel production growth will peak in the 2030s and 2040s, when the cost of green hydrogen and hydrogen-based steelmaking will have fallen significantly following earlier deployment in places such as Europe.

The picture that emerges from this analysis is one in which India provides a real but time-limited cushion. It is likely to absorb significant volumes of Australian metallurgical coal through the 2020s and into the early 2030s, but its policy environment, energy security priorities, and the falling cost curve of green hydrogen suggest that the cushion compresses rather than expands as the decade progresses.

TECHNOLOGY TIMELINES AND THE COST CURVE.

The central variable in any honest assessment of metallurgical coal’s long-term outlook is the speed at which green hydrogen becomes cost-competitive with coke. That speed depends on a cascade of factors: the rate of renewable electricity deployment and cost reduction globally; the pace of electrolyser manufacturing scale-up; the policy environment for carbon pricing and industrial decarbonisation; and the capital replacement cycle for integrated steel mills.

Hydrogen-based steelmaking will be required if steel is to be fully decarbonised, but the technology has enormous hurdles to overcome. Wood Mackenzie’s base case includes some 260 million tonnes of steel produced using hydrogen by 2050 — just 12% of the global total — with the vast majority coming online after 2040. A net-zero scenario would need double that amount, requiring approximately 42 million tonnes of green hydrogen to feed DRI plants or be injected into blast furnaces.

One of the major constraints to a net-zero scenario for steel is the significant renewable power capacity required globally to produce green hydrogen — some 1,600 gigawatts — which represents about 75% of current global installed renewable capacity. The cost to produce green hydrogen is a major constraint, with costs needing to reduce by 60% for hydrogen-based steel to compete with other steelmaking processes.

These figures do not foreclose the transition. They time it. The meaningful commercial-scale displacement of metallurgical coal in steelmaking is, on current trajectories, a post-2035 phenomenon in most of the world outside northern Europe. The trend for a decline in industrial coal consumption is expected to take shape in the late 2030s or early 2040s. Within that window, Queensland’s premium hard coking coal retains relevance — not permanently, but durably.

What compounds the uncertainty is the supply side. The supply outlook for metallurgical coal appears increasingly constrained, with only a limited number of new mines scheduled to begin operations before 2030 — including Pembroke Resources’ Olive Downs project in Queensland. This limited pipeline of new developments coincides with several existing operations approaching the end of their planned production lifespans, creating a potential supply gap in the coming years. A structural supply shortfall in metallurgical coal, even against gradually declining demand, could sustain price support for Queensland’s existing operations well beyond the point at which the demand narrative might suggest vulnerability.

Despite immediate challenges, the medium to long-term outlook presents a different picture driven by increasing steel production demands in developing Asian economies, limited new metallurgical coal supply, and a slower-than-anticipated transition to green steel technologies.

THE HONEST RECKONING WITH STRUCTURAL RISK.

None of this amounts to a guarantee of perpetual relevance, and Queensland’s civic institutions would do a disservice to the state by pretending otherwise. Long-term metallurgical coal trade faces challenges from technology change and energy security concerns that were not part of the risk landscape a decade ago. The European Union’s Carbon Border Adjustment Mechanism, now in operation, creates a policy instrument that systematically disadvantages carbon-intensive steel in one of the world’s major import markets. Uptake of hydrogen in the steel industry will also be driven by a likely roll-out of carbon border adjustment mechanisms globally, with Wood Mackenzie finding that the EU’s CBAM could increase the cost of delivered steel to the EU by about 56% for India and about 49% for China in 2034. Those cost pressures, passed upstream through steelmakers to their input suppliers, will eventually register in the demand outlook for coking coal.

Metallurgical coal faces a complex market landscape characterised by short-term challenges and long-term structural shifts. The near term is characterised by price weakness — metallurgical coal demand in 2025 experienced significant downward pressure due to global steel production declining in the first seven months of the year, ample supply from major producing countries, and economic headwinds affecting industrial activity worldwide. The long term is characterised by the directional pressure of decarbonisation policy, technology cost curves, and the structural retirement of blast furnace capacity in advanced economies.

The Queensland Treasury, in an assessment published in late 2022, acknowledged these dynamics directly. Under the IEA’s Announced Pledges Scenario, Australia’s overall coal production falls by about 25% between 2021 and 2030, with metallurgical coal production remaining relatively steady and Australia exporting significant volumes through to the early 2030s. But Australian coal production is projected to decline by 55% between 2030 and 2050, so that production is about one third of 2021 levels by mid-century. That trajectory implies not sudden collapse but managed, gradual contraction — with the pace depending heavily on which policy scenarios materialise and which do not.

There is a substantial degree of uncertainty inherent in projections of this kind, given the long-term nature of the outlook in a global energy market facing ongoing change. That uncertainty cuts in both directions. The transition could accelerate beyond current forecasts if green hydrogen costs fall faster than expected, if carbon pricing strengthens globally, or if major steelmakers make transformational capital decisions ahead of schedule. It could also proceed more slowly if the renewable infrastructure required for green hydrogen deployment is delayed, if India’s domestic coking coal production programme underperforms, or if the capital replacement cycle for integrated steel mills extends beyond current planning horizons.

A RESOURCE PROVINCE IN TRANSITION.

What Queensland faces, then, is not a cliff but a slope — and the gradient of that slope remains genuinely uncertain. The Bowen Basin’s hard coking coal is among the highest-quality metallurgical coal on the planet. Its proximity to Asian markets, its established port and rail infrastructure, and its geological consistency give it structural advantages that lower-quality producers do not share. In a world where metallurgical coal demand contracts gradually rather than rapidly, the last operators standing will be those with the lowest costs and the highest product quality. Queensland occupies a strong position in that competition.

Overall, the coal-to-chemicals sector is consolidating its role as the main growth driver in global coal consumption, while cement and steel structurally lose share. That loss of share is real, but it is a process measured in decades rather than years. The displacement of blast furnaces by DRI-EAF routes requires not just new technology but new capital at enormous scale. Establishing infrastructure for near-zero-emission steel production requires significant investments estimated between $1.8 and $2.6 trillion, with 90% of that directed towards creating clean hydrogen and clean power generation capacity.

That capital does not materialise uniformly across the global steel industry. It begins in Europe, where carbon pricing is highest and regulatory pressure is most acute. It proceeds in the United States, where the Inflation Reduction Act has created incentives for clean industrial investment. It reaches India and Southeast Asia last, and at a pace determined by the economics of green hydrogen in those regions. Queensland’s exposure to that final phase is the core of the long-term structural question.

The communities of the Bowen Basin — Moranbah, Dysart, Middlemount, Blackwater — are not passive observers of this process. They are the human fabric through which any transition will be felt, and the policy frameworks being developed at both state and federal level will need to reckon seriously with their interests. The history of resource transitions in Australia suggests that the communities that bear the adjustment costs are rarely the ones who shaped the decisions that created them. That asymmetry deserves to be named clearly in any civic accounting of where the industry stands.

WHAT PERMANENCE LOOKS LIKE FROM HERE.

There is a particular kind of civic honesty required when an industry that has defined a region faces uncertainty about its own duration. It is not the honesty of premature foreclosure — declaring the industry finished before the evidence warrants it. Nor is it the honesty of false reassurance — insisting that structural forces do not apply because the product is different from the ones that preceded it into decline. It is the more difficult honesty of holding both things simultaneously: that Queensland’s metallurgical coal industry retains genuine, verifiable value for the medium term, and that the longer-term trajectory requires serious, transparent institutional planning rather than deferred reckoning.

The industry’s civic record — its geological history, its export data, its royalty contribution to Queensland’s public finances, its workforce patterns, its environmental footprint, and the communities that formed around it — deserves to be held in a form that outlasts any particular market cycle. coal.queensland is the onchain layer where that institutional memory lives permanently: a civic address that carries the full weight of Queensland’s identity as a metallurgical coal province, without pretending that identity is frozen in the present moment. Permanence, in this context, is not the same as stasis. It is the capacity to carry the record faithfully forward — through the years in which the Bowen Basin continues to produce, and through whatever comes after.