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South African Coal Market News and Analysis

South Africa is the world’s seventh-largest coal producer and a net exporter – accounting for close to 9% of total world steam coal exports in 2015. Along with Indonesia and Australia, South Africa is shifting directions from Europe toward Asia, with India accounting for 70% of its exports to Asia in 2015. IHS Markit expects South Africa to play a key role providing for Asia’s key demand centers, predicting 56MMT in steam coal exports to Asia by 2020, steadily increasing through 2040.

South Africa is well poised to meet Asia’s future coal demand. The country’s proven reserves sit at an estimated 30 BMT, and an estimated 30 billion MT more in reserves could be extracted from neighboring countries Botswana, Namibia, Zambia, Zimbabwe and Mozambique. In addition, in 2014, South African suppliers negotiated take-or-pay agreements with the rail operator Transnet, effectively locking in rail rates that will increase only with inflation generally.

South Africa’s export competitiveness, however, faces limitations from the quality of its coal, which tends to have high ash content and low calorific value. In addition, Eskom, the domestic utility, eats up close to 125MMT of domestic coal production annually – a figure expected to rise to 160MMT by 2020 due to the government’s continued supply security concerns. Suppliers also face mining and labor cost inflation, which has been offset by the rand’s depreciation relative to the US dollar. Finally, existing low power prices need to rise to justify greater commitment by the state to coal development; the absence of this commitment already serves as a major disincentive to mining investments.

Despite these obstacles, IHS Markit predicts South African exporters will provide formidable competition for Indonesian suppliers in the southern Asian markets, particularly in India, where Richards Bay material is currently winning at the expense of Indonesian coals.

You can find the latest South African coal market data, news and insight through our South African Coal Report. Available through our APAC and African Coal Market News & Analysis service, this report provides:

  • Key price indices:
    • Richards Bay Index (6,000kc NAR)
  • South African import and export statistics for metallurgical, steam and petcoke
  • South African production and consumption data for metallurgical, steam and petcoke
  • Analysis of major producers, producing regions, transportation costs
  • Infrastructure focus on Richards Bay coal terminal: Loading rates, rail, capacity, vessel queues and freight (including Baltic Dry Index)
  • Analysis of the latest South African coal market news: Briefs, tenders, stocks, contracts

Visit our APAC and African Coal Market News and Analysis service.

Experts

Jim Thompson

He is conversant on worldwide market trends, with a focus on the North American coal markets. Mr. Thompson provides expertise both in thermal coal for electricity production and metallurgical coal for use in the steelmaking process. He is widely quoted by leading financial newspapers and speaks at multiple, industry-related conferences. He has more than two decades of experience in providing analysis and insight on coal markets for coal producers and consumers, as well as for financial analysts and investors.​ Mr. Thompson co-founded Energy Publishing, which was acquired by IHS Markit in 2013, and is now part of IHS Markit. He graduated from Dallas Baptist University.​​

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Scott Dendy

He was instrumental in designing, developing and launching the McCloskey/Xinhua Infolink South China CFR 5,500kc marker as well as API8, API5 and API3 (in conjunction with Argus Media) for IHS Markit. He has overseen the rapid uptake in traded derivative volumes based against IHS Markit's McCloskey Indonesian Sub-bituminous FOB marker. His role demands a good understanding of trading, both in physical and derivative/futures markets, from how they work to how they are developed, launched and adopted. He is also the managing editor of International Nuclear Business from IHS Markit. Previously, Mr. Dendy was the editor of UK Powerfocus for The McCloskey Group, where he closely followed the UK's New Electricity Trading Agreements (NETA). He worked on a number of European power modeling projects for Power Ink Limited, where he also co-edited a quarterly UK power generation report for Financial Times Energy.  During the early 2000s, Mr. Dendy worked within the Power Development division of the international engineering consultancy Mott MacDonald. Before that, he worked at the energy purchasing consultancy John Hall Associates. He has more than 17 years of experience in covering energy-related traded markets. Mr. Dendy has a Master's Degree in History from the University of Leeds, United Kingdom.

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Bob Hodge

He leads a team of writers who report daily on the US coal industry, assessing coal prices, production, transportation and coal-fired power generation. He has more than a decade of years of experience in research and writing about both thermal and metallurgical coal markets in America, as well as legislative and regulatory issues that impact the coal industry. Mr. Hodge is a graduate of the University of Tennessee, Knoxville, Tennessee, US.

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