The lasting impact of the COVID-19 pandemic on the U.S. coal sector became clearer last week, with declining demand and potential contract disputes for the broader mining community on the horizon, according to a briefing paper published by S&P Global Market Intelligence.

Last week, the U.S. EIA forecast domestic coal production would fall 22% year over year to 537 million tons in 2020 due to declining demand for coal in the electric power sector, lower demand for U.S. exports, and mines idled by COVID-19.

It projected a 19% decrease in total utility coal consumption this year, while it expects higher demand for exports due to an economic slowdown in Europe.

Coal plants will consume about 20% less power from coal amid an overall 3% decline in electric power generation in 2020, based on the agency's estimate.

Coal miners will soon face a tougher year due to the economic slowdown caused by the coronavirus pandemic, with companies already borrowing money from their available financial facilities, cutting production and implementing other measures to secure liquidity amid a potential global recession.

"I don't think we're ready to say that this is the death blow for any of our rated companies that remain, but for some of the unrated companies, I really do wonder," a lead coal analyst from Moody's Investors Service said. "Companies that were small to start with, probably didn't have a lot of liquidity, do they get through this? It's an open question."

Adding to the complications the broader mining sector could face in the months ahead, attorneys told S&P Global Market Intelligence that the economic fallout of the COVID-19 pandemic may trigger unprecedented levels of force majeure disputes between suppliers and their customers.

U.S. mine safety officials said last week that they could not identify mines closed for COVID-19 related causes nor offer figures on the number of cases of the disease reported by mine employees.

U.S. Department of Labor spokesperson Laura McGinnis said the agency does not actively collect data on the reasons for mine status changes and does not have access to comprehensive data on COVID-19 cases reported by mining employees. However, there have been multiple cases in the U.S. of miners testing positive for the novel coronavirus.