S Africa coal price must surge 20% to spur exports
South African thermal coal exports via the Richards Bay export hub will continue to languish at around 73m tonnes/year unless benchmark export prices rise at least 20% from current levels, the CEO of miner Canyon Coal said.
Shipments from Richards Bay Coal Terminal (RBCT) – which account for more than 90% of the country’s exports – will likely total 73m tonnes this year, compared with 73.5m tonnes in 2018 and 76.5m tonnes in 2017, said Vuslat Bayoglu, at a Coaltrans conference in Johannesburg.
Since 2013, RBCT loadings have averaged just over 73m tonnes/year.
The total is well below the export terminal’s capacity of 91m tonnes, in part due to a lack of investment in new coal production capacity, but Bayoglu told Montel a free-on-board price of at least USD 75/t, for benchmark 6,000 kcal/kg-grade material, could spur some increase in shipments.
The Global Coal Richards Bay index has plunged 35% so far this year, with a latest assessment at USD 61.69/t, thereby resulting in high domestic stockpile levels, with exporters reluctant to sell.
“South African exports have been flat for a long time,” Bayoglu said, pointing to an abundance of competing coal in the seaborne market.
“Indonesia’s undisciplined exports have had a big impact [on supply],” he said, while also acknowledging a terminal demise in demand from Europe, which used to be a key market for South African exporters.
South Africa exported nearly 79m tonnes of thermal coal last year, including road and rail shipments, according to customs data.
Meanwhile, Bayoglu dismissed global pressure for South Africa to reduce its reliance on coal, citing the dire impact on the country’s economy from near-term move away from the fuel.
“Coal for South Africa is like oil for Saudi Arabia. If you asked Saudi Arabia to stop producing oil, they’d laugh at you.
“South Africa is not Denmark, or Germany,” he said, adding the country did not have the option to switch so rapidly to gas and renewables.
“Coal will carry on being important for South Africa for the next 20-30 years.”
Canyon Coal is a South African mining company, which owns four coal mines, with some 700m tonnes of resources.