• 5 minutes Drone attacks cause fire at two Saudi Aramco facilities, blaze now under control
  • 8 minutes China Faces Economic Collapse
  • 12 minutes Oil Production Growth In U.S. Grinds To A Halt
  • 14 minutes Iran in the world market
  • 17 minutes Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 4 hours USA Wants Iran War -- Shooty Shooty More
  • 10 mins Experts review drone damage . Say Saudis need to do a lot of explaining.
  • 8 hours Yawn... Parliament Poised to Force Brexit Delay Until Jan. 31
  • 8 hours Collateral Damage: Saudi Disruption Leaves Canada's Biggest Refinery Vulnerable
  • 4 mins Saudis Confirm a Cruise Missile from Iranian Origin
  • 20 hours USA : Attack came from 'Iranian soil'. Pompeo to release 'evidence'.
  • 5 hours The Spy Money: U.S. Wants To Seize All Money Edward Snowden Makes From New Book
  • 1 hour Aramco Production
  • 11 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 1 hour Trump Will Win In 2020 And Beyond..?
  • 2 hours The Belt & Road Initiative: A Wolf in Sheep's Clothing?
Alt Text

How To Play A Recovery In Oil Prices?

A realistic correction in the…

Alt Text

This Supermajor Is Leading The Energy Sector

This supermajor has been standing…

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




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play