Although the RB1 benchmark fell slightly on the week, the off-spec grades have seen some resilience. Yet again Rand weakness is helping miners to weather the storm, but this only really helps for higher grade material.
There is almost nowhere other than Eskom for low-grade material to go, incurring almost the same production costs as the higher grades. Financing for coal mines and extensions remains in private hands as banks further clarify their positions. Other than subsidising miners through the coal price, Eskom is in no position to provide capex, and has recently gone out to tender for proposals around repurposing its RTS stations.
South Africa is embarking on a complex risk adjusted strategy to fight Covid-19. All open-cast mining and coal for Eskom purposes is allowed whilst underground mining can operate at 50%, no doubt targeted mainly towards tightly cramped gold and platinum mines. Meanwhile, Eskom has served force majeure on coal producers, halting their deliveries that may now instead try for the export market.
With India out of the picture right now for SA exporters, all eyes are on South Korean utilities. However, other SE Asian power demand remains subdued as lockdowns are extended.