China's coal industry saw its cost base shift lower in 2025 as a prolonged price downturn widened losses across the sector, prompting miners to ramp up cost-cutting measures to preserve cash flow and margins, with the trend expected to reverse only modestly through 2028, according to a latest research report released by Sxcoal.

The average full cost of raw coal across Chinese mines fell to 295.31 yuan/t in 2025, down 9.20% year on year, while the port-delivered cost of commercial coal dropped to 574.13 yuan/t, down 5.82% from the previous year, the report showed.

The decline was largely driven by lower resource tax payments linked to weaker coal prices, as well as cuts in wages, benefits and materials spending.

Resource taxes for both thermal coal and coking coal fell sharply year on year in 2025, with thermal coal seeing a steeper drop, reflecting the impact of lower prices and tax rates, the report said.

Wages and welfare costs fell 11.58% year on year in 2025 as miners tightened spending amid a weak market environment.

Materials costs also declined, pressured by lower steel and coal prices, with miners reducing procurement, reusing old parts and cutting tunneling activity to limit expenditure.

By coal type, the full cost of raw thermal coal averaged 255.79 yuan/t in 2025, down 9.15% year on year. The four major producing regions — Xinjiang, Inner Mongolia, Shaanxi and Shanxi — accounted for 86.09% of sample capacity and all recorded costs at the low end nationally.

For coking coal, the ex-washplant cost of washed coal averaged 759.36 yuan/t, down 5.54% year on year, with Xinjiang, Shaanxi, Ningxia, Shanxi and Inner Mongolia positioned at the left end of the cost curve.

The industry has shifted from a phase of capacity expansion to one of lean survival, where failing to cut costs leads to losses and failing to improve efficiency threatens viability, the report noted.

Looking ahead to 2026-2028, costs are expected to recover modestly as the market stabilizes, driven by rising spending on power, materials and maintenance as mining depths increase, along with a recovery in wages, PPI and CPI.

Sxcoal forecast the average full cost of raw coal to rise to 298.34 yuan/t in 2026, up 1.03% year on year, before edging up to 299.73 yuan/t in 2027, with the pace of growth slowing to 0.47%. By 2028, the cost is seen reaching 300.82 yuan/t, up just 0.36% year on year, entering a broadly stable range.

For commercial coal, the port-delivered cost is expected to rise to 576.50 yuan/t in 2026, up 0.41% year on year, then to 579.95 yuan/t in 2027, with the growth rate widening to 0.60%. In 2028, the cost is forecast to increase further to 583.85 yuan/t, up 0.67% year on year, remaining within a moderate range.

As China navigates its energy transition and structural adjustments, a deep understanding of coal production costs is critical for corporate decision-making, the report said.

The Sxcoal report aims to help clients identify price floor ranges, formulate import substitution strategies, optimize costs and maintain capacity utilization, while also providing a reference for industrial upgrading and policy formulation.