Coal production declines slightly

12th September 2003 By: Luxolo Tyali

According to the Department of Minerals and Energy (DME) Minerals Bureau report for 2002/3, South Africa’s run- of-mine coal production last year decreased by five-million tons from 290-million tons in 2001, to 285-million tons in 2002.

Some 220-million tons were of saleable quality, 3,3-million tons less than the previous year.

Output improved at five coalfields – by up to 44% at some, such as Kangwane – while six coalfields saw a decrease in their output of up to 34%, such as at the Ermelo coalfields.

Seventy-nine per cent of South Africa’s total run-of-mine coal last year came from Mpumalanga alone, while the remaining 21% was shared between the Free State, with 8%, Limpopo with 12%, and 1% produced in Kwazulu-Natal.

During 2002, opencast mines provided 50% of the run-of-mine production, with seven large collieries producing 122-million tons of the about 220-million tons of saleable coal produced by the industry.

The coal-mining industry’s labour force reached an all-time low of 43 000 workers in December 2002, decreasing from 50 000 workers in January last year, with the number of collieries also decreasing from 55 to 54 during the same period.

South African coal was exported to 41 countries last year, with 74% of coal, valued at R19-billion, going to consumers in the European Union.

The percentage of coal exports to Europe increased while exports to Asia decreased.

“Gradually, South Africa’s market share in Asia is being taken over by Australia, Indonesia and China,” says DME Minerals Bureau chief mineral economist Xavier Prevost.

Australia’s ability to produce exports at lower rates to some des-tinations, makes its prices favourable over those of South Africa in the Asian export market, explains Prevost.

Some 66-million tons of coal were exported through the Richards Bay Coal Terminal (RBCT) last year, remaining stagnant as compared to 2001.

The Durban and Maputo terminals together exported 3,1-million tons last year.

Spot coal prices increased by $3,22 from January to July this year.

However, because of the rand’s appreciation against the dollar, rand prices fell by R17 a ton, states Prevost.

The average free-on-board (FOB) price of South African export coal last year was R280 a ton.

It was R378/t for anthracite, R341/t for bituminous low-ash coal and R278/t for bituminous steamcoal.

Compared to 2001, this represents an increase of R86/t for anthracite, R35/t for bituminous steamcoal, and a decrease of R6/t for bituminous low-ash coal.

During the first half of this year, the average FOB export price in rand terms was reduced by 13%.

Last year, the inland coal market recorded sales of 157,6-million tons, valued at R11,77-billion.

The electricity sector bought 92,4-million tons at R53/t, the synthetic fuels sector used 50,6-million tons at R93/t, and the industrial sector, including mining, used 12,8-million priced at R98/t.

Total sales of anthracite and bituminous coal to the metallurgical industry increased by 400 000 tons to 5,8-million tons at an average price of R204/t.

Of the 227-million tons of coal sold last year, about 30% was exported, achieving an income of R19,4- billion, 62% of the total revenue for the year.

Last year, the local market price of bituminous coal was stable, while that of anthracite rose by 34%.

Prevost says the price of anthracite in the local and export markets is improving, but South Africa’s output quality and volumes did not increase as a result of delays in the development of new mines last year.

During the first half of this year, the average inland coal price was stable compared to December last year.

Asia’s output increased by 4,6% and, as a result, world coal production increased by 0,9% last year.

Prevost attributes the improvement in Asia’s output mainly to China and India’s 67-million tons production rise.