Asia Reshapes Coal Markets

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"South Africa's coal business is not in Europe, it's in Asia."

Booming demand for coal from China and India was reshaping the world export coal business and could result in 75% of South Africa's coal exports going to Asia during 2010.

That's the view of Gerard McCloskey, founder of the McCloskey Coal Group, in a presentation to the McCloskey SA Coal Export conference being held in Cape Town.

South Africa's most important market has traditionally been Europe but McCloskey told the conference, "South Africa's coal business is not in Europe, it's in Asia. We estimate total Asian demand for coal rose from 356mt in 2007 to 460mt in 2009."

McCloskey's view was backed up by Norman Mbazima, the CEO for Anglo American's thermal coal operations, who commented Indian domestic coal production, would not keep pace with demand and India could be importing as much as 200 million tonnes (mt) annually by the end of the decade.

South Africa and Mocambique are ideally placed to meet rising Indian demand but both countries had to overcome major infrastructural problems to be able to supply the coal.

Mbazima commented, "in Mocambique a concerted effort is underway to develop the mines and the infrastructure.

"In South Africa, it's a done deal that the Richards Bay Coal Terminal (RBCT) will be able to handle 91mt of coal annually but there has to be discussions between the mines and Transnet Freight Rail (TFR) to actually get to that level of exports."

The situation is that South Africa will lose out on this future booming demand for coal unless the problems with TFR's capacity are resolved.

Exports through the RBCT during 2009 at 61.1mt dropped below the 61.7mt exported in 2008, which was the terminal's worst performance in a decade.

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