There are two main types of coal: metallurgical (met) and thermal coal, which differ by their fixed carbon, volatile matter, moisture, ash, and sulphur content. Met coal is used for making steel whereas thermal coal is primarily used for generating heat and energy. Both properties held by CCIC contain high-quality metallurgical coal. Therefore, we will only provide a high-level overview of the metallurgical coal market.
Further, there are three main categories of metallurgical coal. From highest quality to lowest quality they are: hard coking coal, semi-soft coking coal, and pulverized coal injection (PCI) (or low volatile pulverized coal [LVPCI] injection). Met coal quality can be improved by different washing processes, but only to a certain extent as there is an inherent “coal quality.”
Met coal is needed to produce coke, which is then used in a blast furnace along with iron ore and flux to ultimately produce steel. Coke has three main functions: (1) it must be strong enough to support the furnace charge, (2) it must provide adequate heat to smelt the charge, and (3) it must also act as reducing agent for the iron oxides. Coke is obtained from hard coking coal, which must be low in ash since ash is retained in the coking process and would introduce impurities to the liquid. The coal must also be low in sulphur since only approximately one-third of the sulphur is released as gas in the coking oven. Sulphur is also a contaminant in the liquid metal. While some amount of coke can be replaced by lower-quality coal (such as PCI) in the blast furnace, coke, and thus hard coking coal, is always required: the higher the quality, the higher the price received. Furthermore, coking coal is sold to steel plants as part of certain blend specification, tested over months or years and, thus, switching coking coal quality is not always straightforward.