Bangalore, September 08: Some 33 percent of South Africa’s coal exports are expected to go to India this year and the proportion may rise to 40 percent in 2010, a consultancy group said.
Dirk Fourie, Vice President at Wood Mackenzie Africa said that while South Africa is able to export as much as 72 million tonnes of coal this year, due to rail constraints, it might only be able to ship less than 65 million tonnes.
“Our forecast is that some 33 percent of that could go to India this year…next year it could be more, up to 40 percent,” he told Reuters on the sidelines of a conference.
Wood Mackenzie offers consulting services and research products to the energy and mining industries.
South Africa has traditionally shipped its coal to Europe, but increased demand from India, which Fourie said is expected to grow at a faster rate than in any other country, and less attractive prices to Europe have changed that.
“It’s a supply-demand system… As we move more and more to India, there will be less suppliers to Europe which will increase the price… and then it may be beneficial for us to supply again to Europe,” he said.
Fourie said earlier that South Africa and Indonesia would continue to compete for market share in the Indian coal market.
But South Africa’s export potential has been limited by the constraints faced by logistics group Transnet in delivering all the coal destined for exports to the port.
Transnet has invested heavily in rail infrastructure, but exports might still not be far above the 61.8 million tonnes shipped out of the Richards Bay Coal Terminal (RBCT) last year.
RBCT is in the process of expanding the port’s capacity to 91 million tonnes from 76 million at the moment, but analysts doubt the country will be able to export that much in the short term due to constraints on the rail line.
“(South Africa) can make the 91 million tonnes. (It) will not happen next year…but I hope it will happen in the short term,” said independent consultant Xavier Prevost.
Global miners Anglo American, BHP Billiton, Xstrata, petrochemicals group Sasol and diversified miner Exxaro control 79 percent of the South African coal market.
Nearly half of the 253 million tonnes of coal produced in 2008 was used for power generation, while some 25 percent went to exports, data showed.
Fourie said some additional 100 million tonnes in annual production are expected to come on stream by 2020, with the majority or 85 percent in thermal coal.
-Agencies