SA’s coal exporters face a shrinking market

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Major markets plan to rely more on their own coal production and renewable energy, posing a problem for local miners

As Thungela Resources’ CEO attempts to talk up the future of the Anglo American coal spin-off, SA’s second-largest coal export destination is planning to bring coal imports to an end.

Pakistan — SA’s second-biggest coal export destination — is now planning to do exactly that. Pakistan media report that the government is planning a range of reforms to address the power sector’s hopelessly unsustainable financial position. These include the cessation of further coal-fired power development and the conversion of existing plants using imported coal to use domestic coal instead.

Pakistan’s plans to replace imports with domestic coal come as India — SA’s largest coal export destination by far — strives to do the same. It has been targeting import replacement for years, with little result. But the Covid-19 crisis has reinforced government efforts as it targets economic recovery and support for Indian jobs.

Much was made of RBCT exports to China following its ban on imports from Australia. However, this is unlikely to last. President Xi Jinping has committed to reducing China’s coal consumption from 2026, and China is another major coal producer that looks set to replace imports with domestic coal in the medium term.

South Korea — another key market for SA coal — has no domestic coal to replace imports, but its consumption looks set to decline as the nation’s energy transition gathers pace. Under the South Korean government’s ninth electricity plan, coal-fired power generation is expected to decrease 23% by 2030, reducing thermal coal consumption by about 19-million tonnes per annum. Thirty coal-fired power plants are due to be shut down by 2034.

 

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