While the robust revival of thermal coal prices has surprised the carbon sceptics and renewables zealots alike, the even more spectacular performance of coking (metallurgical) coal has played out to largely empty auditoriums.

Steel blast furnaces may be one of the most carbon-belching activities, but otherwise coking coal is not seminal to the spirited but circuitous debate about whether Old King Coal really has had its day.

Things go better with coke

The other reason for coking coal’s shy profile is that when it comes to steel production, flirtier cousin iron ore steals the headlines. Yet for every tonne of steel produced, about 600-750 kgs of coking coal (converted to coke) is required.

Relative to thermal coal – and there’s plenty of that black stuff – decent coking coal deposits are much scarcer.

To date, investors haven’t exactly been spoiled for choice when it comes to pure-play coking coal exposures. BHP Billiton (sorry – BHP) is the world’s biggest producer, via the BHP Mitsubishi alliance (BMA) in Queensland.

Similarly BHP spin off South 32 (S32, $3.90) is a meaningful producer from the Illawarra region, but not relative to its total size.

But with coking coal prices edging back to near record levels, some smaller plays are sniffing the winds of opportunity. The interest is squarely focused in Canadian province of British Columbia, the Toorak of met coal addresses along with Queensland’s Bowen Basin.

At the junior end, ASX aspirant Montem Resources is passing the Mountie’s hat around for $20m in an IPO to revive an open cut project in the Crowsnest Pass geological precinct straddling Alberta and British Columbia. In its second attempt at an IPO, Montem plans to list in mid October.

Gina Rinehart’s Hancock Prospecting recently splurged $69m for a 19.9% stake in Riversdale Resources, which owns the Grassy Mountain project just down the road.

Montem has acquired six tenements, four of which previously have been mined, with a total tonnage of 160 million tonnes.

But the initial focus is on Tent Mountain, which produced up to 1973 1983 and still retains a mining permit. “We have some work to do to get the coal quality information up to date and complete a feasibility study for it,” Yeates says.

 While Tent Mountain is subject to a definitive feasibility study, Montem is working on a presumed $130m capital cost for a 1.5 million of tones per annum (mtpa) operation (a conveniently proximate railway would whisk the produce to the port of Vancouver and on to the hungry Asian mills).

Yeates notes that Canada’s giant Teck Resources produces 26mtpa from three mines in the region at a cost of $C90/t ($85/t, loaded on to the ship).

 “At the moment there’s a huge cash margin in excess of $US100 ($138) a tonne,” Yeates says. “We do our numbers on a more conservative but it has the potential to be a real cash generator.”

Other aspirants are lapping at Montem’s coal-dusted heels, with Jameson Resources (JAL, 17.5c) winning funding support for its Crown Mountain project in British Colombia’s Elk Valley Coal Field.

At a similar stage to Tent Mountain, Crown Mountain is costed at $US281m of start up capital for a mine producing 1.7 mtpa over 16 years.

“Coal prices assumed are significantly lower than (the) current market,” the company says.

Jameson’s financial backer is the ASX-listed NZ producer Bathurst Resources (BRL, 11c), which is stumping up $C4m for a current exploration program. In what’s expected to emerge as a 50-50 joint venture, 

Bathurst, which accounts for 2.2 mtpa of output in NZ, also has the option to fund $C7.5m in non-exploration activities and eventually chip in $C110m to build the open-pit mine.

Lower down the development curve, Pacific American Coal (PAK, 5.1c) is running the drill bit on its Elko coking coal project, also in the fecund Crowsnest field.

The ground is currently rated as a 257mt resource, but further work aimed at honing this estimate has resulted in “significant amounts of coal”.

Closer to home, Bounty Mining (B2Y, 30.5c) re-listed in June, having raised $18m to acquire the mothballed Cook Colliery and coal handling plant near Blackwater in the Bowen Basin.

The mine operated up to March last year, when an “inundation event” forced the hand of owner Caledon Coal. The venture was placed in care and maintenance, while Caledon Coal went spectacularly bust.

Bloody Queensland weather!

Backed by Chinese interest, Bounty plans to expand the mine’s output to 2.2mtpa across four operating areas.

Bounty CEO chairman and CEO Gary Cochrane was founding director of Queensland producer Millennium Coal, while director Rob Stewart once headed Whitehaven Coal.

With little prompting they would point to Rio Tinto’s $2.9bn sale in March of its 80 percent stake in the Kestrel mine, also in the Bowen Basin. In 2017 Kestrel produced 5.1mt of saleable coal, 4.25 of the hard coking variety.

For investors who like to think big, late in September the US based Coronado Coal said it would pursue a $4.6bn float on the ASX, thus exposing investors to its Curragh coking coal mine in Queensland (acquired from Wesfarmers) as well as three mines in Virginia.

The company is seeking to raise up to $1.2bn, which is not chump change given about 20 percent of Coronado’s output is untrendy thermal coal.

 “Demand from Asia for met coal, particularly from emerging economies, is expected to be strong and Coronado will be a key supplier to this growth market,” Coronado Chairman Greg Martin says.

Of course, the coking coal story ultimately prospers or founders on steel making trends. The World Bank forecasts current year steel production of 1.548 billion tonnes, compared to last year’s 1.535bt and on par with record 2014 levels.

The drivers include China’s Belt and Road economic colonisation policy and India’s desire to more than double steel output to 300mt by 2030.

The better coking coal (and iron ore) is especially in demand because China has been relocating steel mills to port areas so they can access the premium seaborne stuff, thus reducing pollution.

On the demand side, Japanese and Korean steel producers understandably are keen to diversify their reliance on BMA and Teck.

Yet another variable is the dispute between rail operator Aurizon (formerly Queensland Rail) and the Queensland Competition Authority over Aurizon’s maximum allowable revenue.

A poor result for Aurizon could constrain the state’s coal exports and put further pressure on prices.

As with thermal coal, the post GFC met coal story hasn’t exactly played out as expected. But when does any commodity follow the rules?