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# The Capital Is Leaving and the Tonnage Is Not
- URL: https://the-capital-memo.ghost.io/the-capital-is-leaving-and-the-tonnage-is-not/
- Published: 2026-10-05T09:48:48.000Z
- Updated: 2026-10-05T09:48:48.000Z
- Author: James Coleman

Anglo American agreed in May to sell its Australian steelmaking coal business to Dhilmar for up to 3.875 billion dollars, with 2.3 billion in cash at completion and the rest contingent on prices over five years. Together with an earlier sale of its Jellinbah stake the company will have taken roughly 4.9 billion dollars out of the business and exited the commodity entirely.  
  
Meanwhile the commodity itself is doing the opposite of leaving. Premium hard coking coal out of Australia traded at 264.50 dollars a tonne this week, down about six percent over the month but up more than 38 percent on the year. Australian exports in the first eight months ran to 100 million tonnes, three and a half percent ahead of last year, and Canberra's own forecasts have volumes rising to 160 million tonnes next financial year and peaking near 163 million in 2028 and 2029.

### The Historical Echo

There is a recent and unusually well dated precedent for capital abandoning a commodity just before its price does something violent.  
  
Alpha Natural Resources filed for bankruptcy protection on the third of August 2015\. Arch Coal followed on the eleventh of January 2016, and Peabody Energy, then the largest private sector coal producer in the world, on the thirteenth of April 2016\. That was the peak of the consensus that coal was finished, arriving months after the Paris accord and in the middle of a capital strike against the whole sector.  
  
Supply came out hard. Mines were idled, capital spending stopped, and nobody financed replacement capacity because nobody could raise the money to try. Premium hard coking coal out of Australia started 2016 at 75 dollars a tonne and reached 308.80 in November of the same year, a more than fourfold rise inside eleven months, with no corresponding increase in anyone's demand expectations. The following spring, when Cyclone Debbie cut the Goonyella rail line and delayed twelve or thirteen million tonnes of cargo, the price went from 150.10 dollars in March to 300.30 on the tenth of April 2017, doubling in two weeks.  
  
The mechanism is not complicated and it is not unique to coal. A demand forecast that declines a few percent a year does not price a commodity, because the supply curve responds to the narrative years before demand actually moves. The gap between the two is where the money is made, and it is made by whoever was still holding the assets.

### Where Patient Capital Is Positioning

The retreat this time is being driven by returns rather than by ideology, which matters because it is more durable. BHP's Queensland joint venture reported a return on capital employed of zero for the half year to December, with its asset president saying royalty payments far exceed profits and the chairman of BHP stating plainly that there would be zero investment into Queensland. Coronado curtailed its Logan complex in West Virginia in February because the price sat below its cash operating cost.  
  
The cost curve explains the dispersion. The volume weighted marginal cost of seaborne hard coking coal fell from 182 dollars a tonne in 2024 to 149 last year, and the average Australian margin fell from 72 dollars a tonne to 45\. At those levels the good mines make money and the marginal ones do not, which is why one American producer reported record volumes and a 72 million dollar quarterly profit while another lost eleven million on a similar price deck.  
  
The demand side is slower than the headlines. Roughly seventy percent of world steel still comes from the blast furnace route, which consumes about 780 kilograms of metallurgical coal per tonne of crude steel, against about 150 for an electric arc furnace. Electric furnaces are limited by how much scrap exists and how much electricity they can buy. Something on the order of a billion tonnes of metallurgical coal goes into steelmaking each year, and the Energy Agency expects seaborne demand this year to be sixteen million tonnes higher than last.  
  
For a family thinking across generations, the useful frame is not whether steelmaking coal has a future in 2060\. It is that the assets are changing hands now, at prices set by the people leaving rather than by the people staying, and the buyers of those assets are acquiring tonnage that the world has just finished declaring it will stop needing and has not yet stopped needing. That gap has been the most reliable source of return in resource investing for a century, and it is open again.

![](https://storage.ghost.io/c/44/88/44885750-7681-4d57-825f-5d69f4c60045/content/images/2026/10/the-capital-is-leaving-and-the-tonnage-is-not-cinematic.jpg)

The Capital Memo