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A Norway-based independent energy research and business intelligence company, Rystad Energy, predicts that global coal-dependent energy sectors may look to South Africa and Columbia for supplies in the near future.
Presently, Russia remains Europe’s largest supplier of thermal coal.
Last year, Russia supplied EU member states with 36 million tonnes of thermal coal, representing 70% of total thermal coal imports.
Over the past ten years, coal-fired power generators in Europe have become increasingly dependent on Russian coal, said Rystad Energy.
“There is simply an almost complete absence of surplus thermal coal available globally.
“Prices have shot past $400 and the $500 per tonne mark seems to be in play,” said VP of Coal at Rystad Energy Steve Hulton.
As gas prices continue to soar, European administrations may look to coal to pick up any shortfall in electricity generation as gas usage is scaled back.
However, coal consumers will struggle to source additional coal from alternative producers because the supply/demand balance of the international seaborne thermal coal is extremely tight.
Producers and traders in the Atlantic and Pacific markets are already looking for alternative coal suppliers amid predictions of complete sanctions on Russia’s coal trade or if there is a physical disruption to Russian rail/port transportation.
Hulton said that imported coal is generally of better quality and cheaper than any domestic production as all the best coal in Europe was mined out years ago.
Poland remains Europe’s largest remaining coal producer, and some 70% of total power generation is sourced from coal.
“One of the first places buyers will be calling is suppliers from Colombia and South Africa,” predicts Hulton.
Nearly all of Colombia’s coal production is exported.
The country’s coal industry took a large knock in 2020 due to Covid-19, followed by a three-month-long industrial dispute at the Cerrejon operation.
But the markets have been picking up since last year and is poised to make a killing if sanctions on Russian coal exports come to fruition.
The other larger coal-producing country is South Africa.
But the Rystad Energy Report identified Transnet’s copper theft problem as a stumbling block to bringing the country’s coal exports back to 70 to 75 million tonnes annually.
The coal markets in South Africa fell to below 60 million tonnes last year, the lowest level in decades, because of Transnet’s security problems.
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