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Friday, 25 September 09
FREIGHT RATE CUTS MAKING SOUTH AFRICAN COAL MORE COMPETITIVE IN ASIAN MARKETS


Mining Weekly reported that, Coaltrans South Africa MD Gerard Strahan highlighted the country’s sudden increase in coal exports to southern China and the accelerated push by Indian importers for more tonnage, during the Coaltrans conference, held in Johannesburg earlier this month. 
He attributed the increase to China’s accelerated infra-structure build and the liberal-isation of the Indian coal sector, as well as the latter country’s struggles to fulfil its Ultra Mega Power projects programme.

Strahan pointed out that the domestic markets had also been promising, and increased their effectiveness and competitive position by reducing freight rates by about a quarter in the last month.

The reduced pricing was exerting pressure on Australian and Indonesian markets, significantly improving South Africa’s competitive position to supply eastern and northern Asian markets. “Clearly, the tradition whereby most South African coals were directed to Europe is set to change,” he said.

In addition, the country would see the arrival of 128 new Capesized vessels by the end of the year. This was the equivalent of an additional 14% of the existing fleet.

“Inevitably, this must lead to cheaper freight rates, consequently offering South African producers an economic advantage and wider market options going forward.”

However, Strahan said that the lingering question was whether South African coal producers were able to supply sufficient volumes of coal to fill logistic export capacities in addition to supplying State utility Eskom and other domes-tic industries.

Strahan said that it was expected that exports from the Richards Bay Coal Terminal (RBCT) would fall below 70-million tons this year. “This can be attributed partly to the 
persistent rail transport prob-
lems, as well as the conse-quences of heavy rains, signal failures and generally lower production by South African coal producers.

“All of this, when RBCT capacity is set to increase by next month, on the phase five programme, to 91-million tons of capacity.”

However, Strahan noted that the RBCT’s exports in July rose by just over 30%, compared with exports for the corresponding period in 2008, with much of that heading for India.

“In fact, India now accounts for 20% to 30% of export volumes from South Africa. And, indeed, that is set to expand.”

Lastly, Strahan commented that it should not go unnoticed that other export terminals performed very well during the year, including the Maputo coal terminal and the Durban export facility.
Source: Mining Weekly



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