Page 13 - AfrElec Week 20 2022

AfrElec COAL AfrElec

South African coal miners

criticised for preferring

lucrative EU to local market

SOUTH AFIRCA SOUTH African coal miners are prioritising early this year, according to Mining Weekly,
exports to Europe, where prices for the highest Russia’s invasion of Ukraine in February and
grade go as high as $330/t, more than three times subsequent sanctions on Moscow coal reig-
whay they can get on the domestic market, Min- nited demand and prices. Other factors include
ing Weekly reports reduced output in Indonesia and Australia.
In an interview, Bevan Jones, chief execu- This has left South Africa moving to fill the
tive for African Source Markets, a commodity gap.
insights company based in South Africa, said Due to rising coal demand in Europe, South
the situation could result in insufficient deliv- African exporters are resorting to trucking their
eries to food processors, in turn leading to food loads to ports as the rail utility, Transnet lacks
shortage. capacity. Moving coal by road is four times cost-
Jones accused the traders of “greed” that he lier than doing so by rail, but because of high
said had reached “pandemic” proportions. He prices being paid for the product in Europe,
suggested government intervention to mandate South African traders can absorb the cost.
coal miners to set aside 10% of their output for According to Jones, South African coal burn-
the domestic market and the greater portion for ers could be forced to close their plants due to
export. high prices.
“I am increasingly concerned about the lack “Their only option is to look at closing down
of coal supply to domestic coal users, especially plants, which means food shortages in products
food processors,” Jones told Mining Weekly. such as sugar and potentially maize meal and
“I am sounding the warning on this quite other basic foodstuffs,” he said.
early, and it’s likely that several of the larger food He however said supplies to power utility,
producers might have adequate supplies and Eskom, hospitals and prisons are assured as they
stocks for now. But I know several who do not buy coal on long-term contracts at predeter-
and are literally operating hand-to-mouth right mined prices.
now. While traders are chasing the dollar, Jones
“Every man and his dog is currently trying said, it made more long term sense for them to
to target the coal export market, especially the concentrate on the local market which is more
Mozambique-based Matola coal terminal. sustainable.
Transnet is having difficulties providing enough The government, he added, should intervene
rail, while the number of trucks being requested by not only ordering that 10% of local produc-
for coal export is simply staggering. tion be consumed domestically but by also cap-
“The amount of noise and over-promising ping the price at $93/t while setting a floor price
in the market right now, driven by pure greed of $62/t.
at achieving around R3 000/t ($182/t) free-on- “What are the coal miners going to do when
truck from Witbank, has reached pandemic their staff does not arrive for work because they
proportions.” have no food at home?” he questions. “I feel gov-
The price of coal started rising in late 2020 as ernment should step in and mandate a 10% allo-
Europe’s renewable facilities failed to generate cation – about eight-million tonnes a year – of
enough power, coupled with a shortage of natu- A- and B-grade peas and nuts of export-bound
ral gas and a spike in power demand as COVID- coal, reserved solely for use in the domestic
19 restrictions were being relaxed. market.”™
Although the prices showed signs of easing

Week 20 19•May•2022 www. NEWSBASE .com P13