Coal imports from SA may surge

South Africa's Richards Bay Coal Terminal, the world's biggest coal-export facility, expects a 30-fold surge in sales to India this year, increasing prices for European power producers competing for supplies.

The terminal shipped 7.3 million tonnes to India in the first 10 months, compared with 300,000 tonnes for the whole of last year, Donovan Raj, the terminal's shipping coordinator, said. That may rise by another 2 million tonnes before the end of the year, he said. Richards Bay coal prices have gained 72 per cent this year.

Benchmark prices for thermal coal, used in power plants, have reached a record in Australia, South Africa and Europe in the last three weeks. Costs have risen because of shipping and rail bottlenecks as Asian customers compete for supplies with European utilities.

Indian coal demand will exceed supply in the next five years, Tata Power said last month.

"India is the golden child at the moment,'' Raj said, speaking from the terminal on South Africa's northeast coast, the biggest single source of coal for European power plants.

Indian Power Minister Sushil Kumar Shinde said on August 24 that the country planned to add 78,755 megawatts of capacity in the five-year development plan ending in 2012. That would add 60 per cent to the current level, much of it though coal-fired plants.

Richards Bay's shipping potential will expand to 91 million tonnes a year by the first half of 2009, from 72 million tonnes now, said Kuseni Dlamini, the terminal's chief executive officer.

"That is a market the world is looking at,'' Dlamini said. Richards Bay, which has about 3.5 million tonnes of coal stockpiled at the moment, is owned by mining companies including BHP Billiton and Anglo American.

Coal exported from Richards Bay rose last week to $85 a tonne, the highest since at least August 2000, according to McCloskey Group, a UK-based consultant. Coal from Newcastle, Australia, has risen 64 per cent this year to $84.65.

The jump in prices is encouraging European utilities to buy supplies from the US. The power producers are paying more for the shipping than for the coal, London shipbroker Galbraith's said this month.

Peabody Energy Corp, Consol Energy and Arch Coal, the three biggest US coal companies, forecast the largest increase in exports in 20 years.

Additional demand is also coming from Japan and South Korea. The countries each bought 300,000 tonnes of coal through the port this year, compared with none last year.

More than a quarter of western Europe's thermal coal is shipped from Richards Bay, which reported total shipments of 66.5 million tonnes last year. Exports through October this year were 53.8 million tonnes, little changed from a year earlier.

November's volumes should total about 5.6 million tonnes, from 6.48 million tonnes a year earlier, Raj said.

Derailments of trains run by Spoornet, the state rail operator that delivers coal to the port, and bad weather have hampered shipments, Dlamini said.

Turnover times for ships at the port have been slowed by equipment shortages at the government's National Port Authority.

A helicopter used to transfer pilots to ships was replaced in September this year after crashing in 2005, Raj said.

While Richards Bay is the world's biggest coal-export terminal, Australia's Newcastle port ships more of the fuel from two terminals. South Africa is the world's third-biggest thermal coal exporter after Australia and Indonesia.