Coking coal and Thermal coal, page-40

You are correct in your assessment that coal 1 is much better than coal 2. Thermal coal is valued on its calorific value.

That is not the end of the story though... the most important bit is the cost per MJ delivered. Logistics must be taken into account when valuing thermal coal - for example if you could purchase the second coal at a lower cost per MJ it would then be the better coal for you. This is why building a power station at the mine gate is economically prudent and can make a low value coal (eg brown coal in Victoria or Germany) economic to mine.