thermal coal

South Africa, the next most plausible supplier of Thermal Coal for Europe Friday, 05 July 2013 | 00:00
Deutsche Bank in a report, expects that as the loss of Colombian export volume mounts, European buyers will be required to seek alternative supplies as coal demand in Europe remains at an elevated level owing to the high price of natural gas relative to coal. Since distressed exports of US Appalachian coal are likely to be lower, South Africa appears the next most plausible supplier for Europe.
“We estimate European import demand at 195mt this year, relatively unchanged from last year, but up 21% from the 2010 level of demand.” the Bank noted. Inventories of coal at UK power stations at the end of December were relatively low compared to historical levels at 2.5 months of consumption.
Coal would not lose its appeal for power generation relative to gas unless API-2 rises beyond $154/t over the balance of 2013 for the UK market, after taking into account the carbon price support.
With the blockage of Prodeco’s rail line to Puerto Prodeco in northern Colombia, this brings the disruption to 96% of Colombian thermal coal production, which totalled 79.4mt in 2012. On a cumulative basis, the five disruptions of (i) stoppage of payments to the mine operator at La Francia, (ii) workers’ strike at El Cerrejón, (iii) suspension of Drummond coalloading license, (iv) ban on overnight running of Fenoco trains between 10:30pm and 4:30am, and (v) the blockage of the rail line to Puerto Prodeco.
Deutsche Bank's comments from 15 February stand, in that the size of the disruption is unprecedented, far exceeding the volume lost in August 2012 (1.7mt) as a result of the Fenoco strike.
“We divide the impact of the Fenoco night operations ban into two segments since the blockage of Prodeco exports since 27 February has reduced its incremental effect.” the Bank said.
Interestingly, there may be something larger behind the apparent coincidence of these five disruptions, in that a common thread may run through them all – a growing desire to see a rebalancing of priorities among resource development, environmental preservation and labour interests.
If true, this would explain why long-standing environmental concerns have begun to attract a more vigorous response, and why a number of seemingly disparate issues have simultaneously reached a critical point.
In the case of the Drummond coal-loading license which was suspended this month, the Bank notes that coal spillages have taken place periodically in the past, and more general environmental concerns since the 1990s include the spread of coal dust as well as traffic along north-bound roads in the departments of Cesar and Magdalena.
The coal-loading area of Puerto Bolivar is close to the Bahía Portete Fauna and Flora Sanctuary, which has been described as environmentally sensitive owing to its mangrove and reef ecosystems.
In the case of Puerto Drummond and Santa Marta, the tourist town of Ciénaga lies close by. In both cases, coal dust and spillage of coal from capsized barges have been named as reasons for environmental degradation and reduced tourist activity.
Regarding the noise of trains disturbing the communities of Bosconia, Lleras, Fundación and Aracataca, this issue has been ongoing since at least October 2009, when a detour was ordered to be constructed by the environmental authority.