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South Africa aims to lift coal exports to India

Global oversupply and a drop in coal prices to 7-year lows have hit miners and coal exporting countries hard.

Surface coal mine transportation.
coal mining sector,Export,Export sales,coal mining industry
Business

CAPE TOWN - South Africa is hoping to boost coal exports to India after shipping a record 75.4 million tonnes of coal last year, industry officials said on Friday, as a drop in exports from rival Indonesia opens up the chance to grab market share.

Data from analytics consultancy IHS Energy shows that around 36 million tonnes of South African coal was shipped through Richards Bay Coal Terminal (RBCT) to big coal consumer India last year, up from 30 million tonnes in 2014.

“As far as South African coal for India, it is definitely on a growth path. How long and how much is yet to be seen,” Arun Maheshwari, senior vice president commercial for Indian firm JSW Steel, told a coal conference in Cape Town.

Global oversupply and a drop in coal prices to 7-year lows have hit miners and coal exporting countries hard. Indonesian coal exports fell 50 million tonnes in 2015 due to the market glut and Chinese slowdown.

A drop in Indonesian exports to India, which imported around 165 million tonnes of thermal coal in 2015, offers an opportunity for South Africa, analysts said.

Exports last year were helped by improved transport logistics moving coal to RBCT, while lower freight prices for global seaborne coal also aided South African producers to compete for “price-sensitive” Indian buyers, analysts said.

“We have seen some competitive rates coming from Australia, Columbia and Russia as well, but South Africa should be a consistent player going forward,” Mike Nelson, the head of petroleum coke and coal at Reliance Industries, said.

Depending on the use, buyers of coal can expect to pay less if the rock has a lower calorific value, which relates to the amount of heat and energy contained.

However, South African coal, which is generally of a high quality, can now compete better on price with Indonesian coal, in part due to lower freight prices.

“The view is that you will see higher-quality coals, not only South African, but from other exporters as well displacing Indonesian coal,” Nick Trevethan, a coal markets editor at IHS Energy in London, told Reuters.

The RBCT, which has coal producers Anglo American and Exxaro among shareholders, is spending 1.4 billion rand to upgrade machinery as it looks to increase capacity to 120 million tonnes from 91 million tonnes.

“At this point in time India is still key for us,” RBCT chief executive, Nosipho Siwisa-Damasane told Reuters.

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