As the drop in export from rival Indonesia opens up the chance to grab market share, South Africa has recently revealed that it hopes to boost coal exports to India after shipping a record 75.4 million tonnes of coal last year.
Data from analytics consultancy IHS Energy shows that around 36 million tonnes of South African coal was shipped through Richards Bay Coal Terminal (RBCT) to big coal consumer India last year, up from 30 million tonnes in 2014.
Senior Vice President Commercial for Indian firm JSW Steel, Arun Maheshwari said “As far as South African coal for India, it is definitely on a growth path. How long and how much, is yet to be seen”.
Global oversupply and a drop in coal prices to 7-year lows have hit miners and coal exporting countries hard. Indonesian coal exports fell 50 million tonnes in 2015 due to the market glut and Chinese slowdown.
A drop in Indonesian exports to India, which imported around 165 million tonnes of thermal coal in 2015, offers an opportunity for South Africa, analysts said.
Exports last year were helped by improved transport logistics moving coal to RBCT, while lower freight prices for global seaborne coal also aided South African producers to compete for “price-sensitive” Indian buyers, analysts said.
According to Mike Nelson, Head of Petroleum coke and coal at Reliance Industries, “We have seen some competitive rates coming from Australia, Columbia and Russia as well, but South Africa should be a consistent player going forward”.
Depending on the use, buyers of coal can expect to pay less if the rock has a lower calorific value, which relates to the amount of heat and energy contained.
