South Africa exported around 5.3Mt from its main coal export terminal at Richards Bay since 24 February – when Russian troops first entered Ukraine – compared with just 0.83Mt in the same six-month period last year, Vessels Value ship tracking data showed this week.
As a result, shipments to Europe made up a fifth of the total exports, versus less than 3% last year.
In retaliation for Russia’s war in Ukraine, EU countries banned the import of Russian coal as of 10 August and South Africa quickly emerged as a frontrunner in replacing the supplies, which previously accounted for 60-70% of Europe’s coal.
“If you compare with last year, we are exporting much, much more coal Europe,” said Xavier Prevost, of Pretoria-based XMP Consulting.
Not full potential
But he noted South African producers were not able to reap such great rewards as they could have from the current situation.
“At the moment, we are missing a big chance to ship [coal] to Europe,” he said, adding if stocks at Richards Bay – which are at around 2-3Mt, versus previous years’ averages of 4-5Mt– were higher, much of the volume could be exported.
The Global Coal Richards Bay index has averaged USD 324/t since late February, up from just USD 110/t last year.
“We could do a lot better,” he said, adding one problem was limitations to rail network capacity serving the export hub, while there was also a lack of higher grade coal being produced, which is required by European utilities.
Some large exporters were attempting to overcome the logistical constraints by using alternative ports to Richards Bay, which currently handled nearly all of the country’s thermal coal exports, he said.
Prevost also said the country’s total coal production was likely to be down by 30-40Mt this year, to below 200Mt, as mining companies continued to suffer from economic fallout from the coronavirus pandemic.
Nevertheless, a coal trader with a large German utility said the country was importing “big time” from South Africa.
And he noted also that such volumes were set to continue, with some longer term contracts with South African exporters having been made.
Russian demise?
On the flip side, exports from Russia’s main western coal terminal at Ust-Luga, in the Baltic Sea, to European destinations were down nearly 40% over the period, to under 5Mt, the data showed.
A source close to the port said, however, there was no significant change to port operations, with exports instead mainly going long haul to China, India and North Africa.
He said the only likely impact to operations would be through Western vessels being unable to berth at Russian ports, due to EU sanctions or prohibitively high insurance premiums.
“But it’s not a problem yet,” he added.
