Bad news for SA coal exporters is that India’s state-controlled mining company is pushing ahead with plans to replace up to 100m tonnes of imported thermal coal with its own domestic coal in the coming year. Indian imports for 2019 are estimated at around 200m tonnes of thermal coal, much of that from South Africa.
However, market prices were up as the monthly rollover saw a higher API#4 number on financial markets. The wider global energy complex also saw some big moves higher with US crude oil reaching $40 again, and carbon prices almost back to pre-Corona levels.
Within SA, the availability of coal funding seems to have all but dried up and several mines are potentially facing closure within the next 5 to 10 years. Then again, various Eskom stations are also facing closure during this period. The country faces quite a delicate balancing act to get this timing right, so as not to disrupt supplies to baseload power.
Eskom is apparently in talks again with several coal miners over coal contracts that were priced too high in the past. Of course, the utility may need to get even more dynamic and nimble in its coal procurement going forward, and African Source Markets stands ready to assist with our market platform.