August 29, 2008

South Africa export coal to be kept for domestic

It is reported that some South African coal for exports will have to be diverted to state utility Eskom as a result of the current power generation crisis which has halted South African precious metal mining and cut ferro alloy and coal production also.

Although captive mines which supply 100% of their coal to Eskom are still being supplied with power, Eskom relies on a proportion of spot coal and this comes from coal producers whose output has been hit by the power cuts.

Eskom has the right under most of its contracts to call upon export destined run of mine coal from suppliers if there is a shortfall in the contracted tonnage of domestic coal. Eskom is expected to have to start making such a call within weeks.

Richards Bay FOB prices have hovered around USD 100 per tonne during the past several months, for 6,000 kc per kilogram coal of far higher energy content than the unwashed domestic grade coal consumed by Eskom.