Coal Prices May Rise If South Africa Limits Exports

Global thermal coal prices may rise if South Africa, the biggest supplier of the fuel to European electricity companies, decides to limit exports, an analyst at National Australia Bank Ltd. said.

“This is going to have a fairly significant impact as South Africa is a key exporter in the thermal coal market,” Gerard Burg, a minerals and energy economist at National Australia Bank in Melbourne, said today by phone.
South Africa, the world’s third-largest thermal coal exporter, is developing a strategy that may limit shipments to help ease a domestic power crisis, Bheki Khumalo, a spokesman for the Department of Minerals and Energy, said in an interview yesterday. Prices for the coal have surged this year on supply constraints in Australia and South Africa and increased domestic demand in China and India, Asia’s fastest-growing major economies.

Any further rise in global coal prices will be a cause for “grave concern” to Indian importers, said R.S. Sharma, chairman of NTPC Ltd., the nation’s biggest power generator. The company plans to import more than 5 million metric tons of coal in the year to March 2009, Sharma said in a phone interview from New Delhi.

“If a supplier the size of South Africa cuts exports, it’s going to raise prices and hurt everyone’s plans,” Sharma said. NTPC imports most its coal from Indonesia and Mozambique.

Bloomberg