SA coal juniors should focus on local market - analyst
SOUTH African junior coal miners might have to shift the bulk of their production from the export marke to local industries in the short term in order to take advantage of the rise in local prices, said a commodities analyst on Friday. In the past six months, the price of export coal has dropped by about 38% to trade around $84 per ton by Friday, slightly in line with the prices set for the local market, according to London Commodity Brokers general manager, Bevan Jones.Mr Jones said local industries served as an attractive option for junior miners in light of the drop in export coal prices.Meanwhile, SA’s exports have also taken a bit of a knock with the latest figures from the Richards Bay terminal indicating shipments have dropped by 10,5% to about 4,63-million tons for the month of May, and that stocks at the terminal stood at about 3,11-million tons.“The problem is that some of the juniors have been shut out of the international market in that massive discounters are being put on their coal,” said Mr Jones.According to Mr Jones, local junior miners would also have to contend with India’s growing appetite for the lower grades of coal needed to operate its power stations, which was contributing to the drop in prices.A report by the International Coal Market Watch shows that the excess availability of steam coal in the US, due to weak demand from the world’s biggest consumer of energy, was putting pressure on South African, Australian and Indonesian export coal prices. The report also says weakened demand from the Chinese market had also weighed on prices.JSE-listed coal producer Keaton Energy stood out above its peers, after increasing its annual production fivefold to 1,2-million tons for the year ended March. Keaton is now targeting annual production of 2,7-million tons of anthracite, which commands a higher price based on its superior quality, when its Vanggatfontein mining operation comes into full production.Willie Hattingh, the general manager for business development at JSE-listed Coal of Africa, said although there had been an improvement in the performance by Transnet Freight and Railway’s operations, the company was concerned about the effect tariff costs would have on its existing and planned projects.