Investing in coal stocks may seem like a risky business. After all, with so many countries (Canada included) pledging clean energy by 2030, the coal industry appears more and more like a relic of a dirty past.
Global coal consumption hit a new all-time high in 2024, reaching approximately 8.77 billion tonnes—a 1% increase over the 2023 record. This continued growth was overwhelmingly driven by emerging economies in Asia where strong electricity demand (often exacerbated by heatwaves) and industrial growth pushed consumption to new heights. In contrast, coal demand fell significantly in advanced economies like the European Union and the United States. Though the long-term forecast suggests global demand will plateau through 2027 as rapid renewables deployment meets new electricity needs, for now, King Coal remains firmly seated, sustained by Asian demand.
For investors who want to take a contrarian position, coal stocks could be an interesting and profitable endeavour. Below we’ll break down the risks and potential rewards of coal stocks and help you choose which coal companies might be best for you.
What are coal stocks?
Coal stocks are companies that mine, produce, and distribute the carbonaceous rock known as coal. Though we may think of coal as lumpy black rocks, it has two forms:
- Met coal. Also called metallurgical coal, this coal isn’t used to generate electricity, but instead to make steel and coke. Because it’s used to make steel (which is a major ingredient in recyclable metal and green energy infrastructure), demand for met coal is likely to remain high in the near future.
- Thermal coal. Thermal coal is the kind of coal most people think of. It’s used in power plants to generate electricity and burned to keep people warm. Because of its excessive generation of carbon dioxide, thermal coal is facing an uncertain future.
| Type of Coal | Use/Market | Current Trend | Future Outlook |
| Thermal Coal | Electricity generation and heat | Sharp decline in developed nations (e.g., U.S., E.U.), but growing in Asia. | Terminal decline by 2050 in the West; will continue as an energy “backstop” for decades in rapidly developing economies (China, India). |
| Metallurgical Coal | Used to make coke for steel production | Stable demand, but price volatility is high. | Resilient for the next few decades, as there are few immediate, cost-effective substitutes for steelmaking. |
Of these two kinds of coal, thermal is certainly the most mined. Thermal coal and lignite (a brown coal mined in Eastern Europe, China, and the U.S.) make up 86% of all mined coal, with met coal representing only 14%.2
Top coal stocks in Canada
Canada has roughly 90 coal mining companies, which pales in comparison to China (12,324), Brazil (3,412), Russia (2,850), Ukraine (1,733), and the United States (808).
For the top coal stocks in Canada and the U.S., the following three companies are some of the most highly valued.
| Top Coal Stocks in Canada | Description |
| Teck Resources (TSX: TECK.B) | Major producer of met coal |
| Peabody Energy (BTU) | One of the world’s largest coal producers |
| Alliance Resource PT (ARLP) | One of the largest producers of coal in the U.S. |
1. Teck Resources Limited Ltd
Headquartered in Vancouver, Teck Resources is the second largest seaborne exporter of steelmaking coal. The company also mines for copper, zinc, silver, gold, and lead, though met coal is certainly its biggest operation. Unlike other coal companies, Teck Resources is well poised to benefit from the development and expansion of green energy. For one, the company has plans to expand its copper mines in Chile by 80%.
Copper, along with nickel and lithium, is one of the primary ingredients in rechargeable batteries, and Chile has one of the world’s largest copper reserves. Not only that but Teck mines for met coal, which is used in steelmaking. Considering that steel is required by many energy companies—from solar panels to EVs—Teck Resources will profit as demand for steel increases.
In the third quarter of 2024, Teck reported an adjusted profit of C$0.60 per share, surpassing analysts’ expectations of C$0.37. This performance was driven by a 60% year-over-year increase in copper production at the Quebrada Blanca mine, totaling 115,000 metric tons.
Teck has a strong financial outlook—its stock price has risen steadily year-over-year. It can be a good play for investors who want to capitalize off coal, but also would like to profit from green energy.
2. Peabody Energy
Peabody is one of the world’s largest miners of thermal and met coal. The company currently has 17 mines in operation, and they sell coal to more than 25 countries.
Like other miners of thermal coal, Peabody’s stock has been battered by poor investor sentiment and the switch by power stations from coal to natural gas and sustainable energy. The company recently saw some positive activity, however, when its price target rose from $25 a share to $36. This higher valuation was driven by higher demand for power, the war in Ukraine, and overall higher prices for commodities.
3. Alliance Resource PT
Alliance Resource is a major producer of thermal coal in the United States. The company also has oil and gas interests, and they’ve recently suggested they may start investing in met coal production, EV charging, and renewable energy.
Global demand for energy has given Alliance some heavy tailwinds to ride. Ever since conflict in the Ukraine led Western nations to decrease dependence on Russian energy, Alliance has enjoyed a massive surge in coal sales. Considering that coal prices could rise as much as 22% more than previously thought, Alliance could enjoy some hefty (and unexpected) revenues.
Does the coal industry have a future?
In short — the coal industry has a future, but only half of it. The new reality is a fundamental split between thermal coal (used for power) and metallurgical (met) coal (used for steel).
The days of burning coal for electricity in the developed world are nearly finished. Major economies like the G7 nations have pledged to phase out unabated coal power between 2030 and 2035. The U.S. and the E.U. have seen dramatic cuts, with renewables accounting for over 50% of electricity in advanced economies. In a historic first, renewable energy overtook coal as the world’s leading source of electricity3 in the first half of the year, a shift driven by soaring solar and wind growth that met all new global electricity demand.
However, despite this turning point, overall global coal demand reached a new all-time high in 2024, driven by China and India. These two rapidly industrializing nations are still relying heavily on coal for economic security, and their coal-fired power fleets are still growing in capacity. China alone consumed 55% of the world’s thermal coal in 2024. Therefore, the future of the thermal coal industry is now geographically concentrated in Asia, though even China and India are expected to see a peak in thermal coal use in the coming years.
The true resilience lies in metallurgical coal. It is an essential ingredient in the massive amounts of steel required for global infrastructure, including the very components of the green transition such as wind turbines, solar panel frames, and electric vehicles. Since a cost-effective alternative for high-quality, large-scale steel production is not yet widely deployed, the demand for met coal is projected to remain steady for the foreseeable future, particularly as demand in India and Southeast Asia offsets any long-term decline in China.
Pros of investing in coal stocks
- Coal remains a large source of electricity. However, renewable energy overtook coal as the world’s leading electricity source in 2025 for the first time, fueled by soaring solar and wind growth. This clean energy surge, led by developing nations like China, met all new global electricity demand. Major exceptions remain, as richer nations (US/EU) surprisingly increased their reliance on fossil fuels.
- Many coal stocks pay dividends. The price per share isn’t much, but you can still earn passive income off coal stocks.
- For the short-term, coal remains King. The world’s consumption of coal has hit record highs in 2022. This was mainly because the war in Ukraine caused the price of natural gas to skyrocket, which forced many countries to switch back to burning coal. However uncertain the future of coal, for now, coal is still in high demand.
Cons of investing in coal stocks
- Global demand for coal is expected to fall. By some estimates, demand is already falling. The only country that’s still strongly demanding coal is China. And even their demand declined by at least 3% in the first half of 2022.
- It’s a dirty fuel. Of all fossil fuels, coal generates the most carbon dioxide. As governments across the world lobby for cleaner energy, it’s likely King Coal will eventually be dethroned.
Are coal stocks a good investment?
If you’re an investor with a long-time horizon (say, longer than 15 years), coal stocks are likely a poor investment. Likewise, if your investing philosophy fits the ESG or growth stock model, coal stocks are likely not the right investment for you.
For value investors, however, the story is a bit different. Since many coal stocks are currently undervalued, you could find some unique opportunities to buy low and sell higher later.
Regardless of your investing philosophy, it’s wise to expose only a small portion of your portfolio to coal. For proper diversification, consider adding coal stocks alongside other energy stocks, such as renewables, EV, or even oil and gas. You might even want to buy shares in a coal-focused ETF.