• 4 minutes Energy Armageddon
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 10 minutes Wind droughts
  • 18 hours "Biden Is Running U.S. Energy Security Into The Ground" by Irina Slav
  • 5 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 3 days "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 4 hours "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 3 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 10 days "Forget Oil, The Real Crisis Is Diesel Inventories: The US Has Just 25 Days Left" by Zero Hedge - 5 Stars *****
  • 3 days The Federal Reserve and Money...Aspects which are not widely known
  • 24 hours "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 7 days Is Europe heading for winter of discontent with extensive gas shortages?
  • 3 days "Dodgy Demand Data? The Oil Price Collapse Conspiracy" by Alex Kimani
  • 10 days "The Global Digital ID Prison" by James Corbett of CorbettReport.com
  • 11 days Goldman Betting on Cryptocurrencies
  • 14 days Сryptocurrency predictions
Another OPEC Producer Looks To Back The Aramco IPO

Another OPEC Producer Looks To Back The Aramco IPO

As the world’s largest initial…

3 Chip Stocks To Watch As The Semiconductor Shortage Worsens

3 Chip Stocks To Watch As The Semiconductor Shortage Worsens

The global semiconductor shortage is…

Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

More Info

Premium Content

Here’s An Unexpected Shift In Global Coal Dynamics

Prices in the worldwide thermal coal market appear to be stabilizing. Leading to the question: is there any hope of a recovery in sight soon?

To find out, it’s critical to keep an eye on the supply dynamics unfolding globally. And one particular event may signal a big change coming, according to news emerging this week.

That comes from important global coal producer South Africa. Where Platts reports that local producers may be getting a financial incentive to halt exports.

That’s because state-owned South African electricity generator Eskom is looking for coal feed to its power plants. And may be willing to pay a premium in order to get it. Related: A “Wave of Bankruptcies” About To Hit Coal Industry

The test case here is the Optimum coal mine, in South Africa’s eastern Mpumalanga basin. A facility owned by Glencore — which was placed on care and maintenance in January due to currently-low export prices for thermal coal.

Eskom however, badly needs coal supply from mines like Optimum. Power shortages have been rife throughout South Africa of late, and electricity prices have been steadily pushing upward.

Given such, Eskom has pitched Glencore a deal: restart the Optimum mine and sell the output domestically. Related: Is China Exporting Its Pollution?

In return for the supply, Glencore would reportedly be able to save on transport costs for its coal. With Eskom instead picking up the charges for shipping coal by rail out of Optimum.

According to local experts quoted by Platts, the result would be a cost savings of about $27 per ton for Glencore. Bringing the effective price received by the company for domestic sales to as much as $36 per ton. Related: Can Utilities Survive 21st Century Energy Market?

This is significantly higher than the approximately $16 per ton that Eskom usually pays for domestic coal. Giving a producer like Glencore a significant advantage in selling locally.

If this deal becomes more-widely offered to South Africa’s coal producers, it could have a notable effect on export supply. More miners could choose to sell their product locally — meaning less coal sailing out of the country to buyers in big markets like India and eastern Asia.

Given that South Africa is one of the few swing suppliers for these markets, that would be a significant shift. Watch for export figures over the coming months from South Africa’s key Richards Bay terminal.

Here’s to buying local,

Dave Forest

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News