SA coal exports to Europe surge

Rail capacity challenges limit numbers

17 August 2022 - 08:19 By Nelson Banya
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Exports from the Richards Bay Coal Terminal into Europe have increased by about 720%. File image
Exports from the Richards Bay Coal Terminal into Europe have increased by about 720%. File image
Image: Supplied

SA's coal sales to Europe rose eight-fold during the first half of 2022 compared with last year as demand for the fossil fuel surged ahead of a ban on Russian coal, Thungela Resources said.

In April, the European Union (EU) announced a ban on coal imports from Russia as part of sanctions for its invasion of Ukraine. The ban came into effect on August 10.

Ahead of the ban, European countries, which previously imported 45% of their coal from Russia and have been switching from expensive natural gas to coal, started to source the fossil fuel from other countries, including SA.

Thungela, a leading local coal exporter and part of a consortium which owns Africa's largest coal export facility, the Richards Bay Coal Terminal (RBCT), said Europe was competing with Asia for SA coal.

“It's worth noting that coal exports from RBCT into Europe have increased by about 720% from half a million tonnes in H1 2021 to 4.1 million tonnes in the first half of 2022,” Thungela CFO Deon Smith said during an investor call this week.

“At the same time, exports to Asia from RBCT dropped by 17% compared to the first half of 2021,” he said, adding they enjoyed a freight advantage over Australian and South American coal.

Figures obtained by Reuters in June showed European countries, chiefly the Netherlands, Germany, Poland, Denmark, France, Italy and Ukraine, were importing growing quantities of coal from SA.

Thungela said the high demand had driven its realised average price to $240 (about R3,936) per tonne during the half-year to June 30, compared to $75 (about R1,23) a tonne last year, boosting its profit more than 20 times versus the year before.

The company, which was spun off global mining giant Anglo American in June 2021, said it would return R8.2bn to shareholders after declaring a dividend of R60 per share, driving up its share price more than 6%.

However, Thungela CEO July Ndlovu said SA  could not fully take advantage of the strong coal demand due to the limited capacity of the state-owned rail company Transnet to haul the mineral to port.

Poor maintenance, a lack of locomotives and copper cable theft have diminished Transnet's capacity.

As a result of the rail woes, Thungela has revised its production guidance for 2022 to between 13- and 13.6-million tonnes from the previous 14-15 million range. The company is exploring the possibility of using trucks to haul coal to port.

Reuters


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