• 6 hours Oil Prices Rise After API Reports Major Crude Draw
  • 6 hours Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 7 hours Gazprom Speaks Out Against OPEC Production Cut Extension
  • 7 hours Statoil Looks To Lighter Oil To Boost Profitability
  • 9 hours Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 10 hours Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 11 hours Whitefish Energy Suspends Work In Puerto Rico
  • 12 hours U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 24 hours Thanksgiving Gas Prices At 3-Year High
  • 1 day Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 1 day South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 1 day Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 1 day Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 1 day Iraq Steps In To Offset Falling Venezuela Oil Production
  • 2 days ConocoPhillips Sets Price Ceiling For New Projects
  • 4 days Shell Oil Trading Head Steps Down After 29 Years
  • 4 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 4 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 4 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 4 days Venezuela Officially In Default
  • 4 days Iran Prepares To Export LNG To Boost Trade Relations
  • 5 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 5 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 5 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 5 days Rosneft Announces Completion Of World’s Longest Well
  • 5 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 5 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 5 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 6 days Santos Admits It Rejected $7.2B Takeover Bid
  • 6 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 6 days Africa’s Richest Woman Fired From Sonangol
  • 6 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 6 days Russian Hackers Target British Energy Industry
  • 6 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 6 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 6 days Lower Oil Prices Benefit European Refiners
  • 7 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 7 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 7 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 7 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production

The World's Most Uniquely-Positioned Coal Play

The World's Most Uniquely-Positioned Coal Play

Things are starting to get interesting in the global coal market.

The key word being "starting".

The strategy unveiled by South Africa's power authority Eskom may be a game changer. In that it could divert a significant amount of supply from the export market into the domestic power space.

Now, to be sure, the worldwide thermal coal market is in the doldrums. And it's unlikely that even a significant shift in South Africa is going to be the silver bullet to get prices moving higher again.

At least not everywhere.

But the thing is, when it comes to coal, there are markets within markets. And one of the biggest of these "micro-sectors" is India.

Related: Saudis Claim Conspiracy Theorists, Not OPEC, To Blame For Oil Price Crash

Indian consumers have been desperate to secure supply the last few years. And in this part of the world, they don't have as many options as some other coal buyers.

India is largely too distant to receive coal from a swing exporter like America. And even when it comes to a go-to supplier like Australia, the shipping distances involved can be enough to discourage local buyers.

So India only has a few options when it comes to imported coal. Indonesia has been the main supplier. And nearby South Africa has largely filled any gaps.

Related: Oil Prices Will Recover: Market Fundamentals Are Working

But that could change if South African policies result in a reduction of exports. And if India's supplier-to-the-west goes, what options are left to plug the void?

At the moment, it's difficult to see any answers. Former coal exporters like Vietnam and Thailand are largely flipping to being net importers. And even India's main supplier, Indonesia, is starting to finally see a slowdown in production as a result of low prices and rising domestic taxes on miners.

Given all of this, there is one play that's starting to look interesting: Kenya.

Related: Goldman Sachs Got It Wrong On Commodity Prices

Last week, the Kenyan government announced that it will offer up 31 new coal blocks for bids -- in order to kick-start the country's mining industry for this commodity. This follows on development that's been taking place on a number of initial blocks, from groups like China's Fenxi Mining.

These projects are at an early stage to be sure. And there isn't yet any commercial coal production in Kenya -- let alone exports.

But for foresighted investors, the unique dynamics setting up around the Indian Ocean coal market make this a spot worth watching. Especially if China takes a lead position in securing supply from this prime-positioned nation.

Such an event could trigger Indian miners and coal users to scramble for projects in one of the few places that still offers near-at-hand supply. After all, India has made a number of attempts to develop coal supplies out of Kenya's fellow East African nation, Mozambique -- most of which have been thwarted by lack of infrastructure in that country.

Kenya is even closer to India when it comes to shipping coal. It's early days, but if the industry takes off after the government's recent and aggressive push, this will be a place that India's coal industry will be watching.

Here's to the rise of the East,

Dave Forest

More top reads from Oilprice.com:

- Global Shale Revolution On Hold
- 100,000 Layoffs And Counting: Is This The New Normal?
- The 12 Highest Paid Oil & Gas CEOs




Back to homepage


Leave a comment
  • Edward on March 21 2015 said:
    I'm no expert, but this seems like an incredibly optimistic assessment of the situation in an era when coal is going bankrupt according to another headline on this site, India has announced plans to cut all coal imports within three years, and China's imports have recently dropped sharply. It would seem that the Indian ocean is not a good place to be in the coal business these days.
  • Kie on March 22 2015 said:
    No more coal, thanks.

    Seriously, it causes acid rain, we're acidifying the ocean at a rate that is scary and it causes huge health problems from the pollution.

    Renewables will be cheaper soon (well before the end of this decade), there's no money in coal.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News