South Africa’s Exxaro Resources Says Coal Prices Cooling Off

South Africa’s Exxaro Resources posted a 28% jump in 2022 profit after seeing average coal prices surge more than 150%, but warned prices were easing, partly due to high inventories at European power utilities. Exxaro posted a 41% increase in revenue to 46.4 billion rand ($2.53 billion). It realised an average coal price of $251 per tonne last year, up from $96 in 2021, due to a price surge after the European Union banned coal imports from Russia following its invasion of Ukraine in February 2022.

However prices, which started coming off in the final quarter of 2022 due to the European inventories amid milder winter temperatures in October and November, have continued to decline in the New Year, Exxaro’s finance director Riaan Koppeschaar told Reuters.

Like its peers, Exxaro has been trucking some of its coal to ports due to rail capacity problems at South Africa’s state-owned Transnet. Transnet is struggling to haul minerals to port due to the shortage of locomotives and spares as well as cable theft and vandalism of its infrastructure, forcing exporters to resort to rail. But coal volumes moved by trucks, an expensive alternative to rail, are declining due to weaker prices, Koppeschaar said.

South Africa's Thungela expects FY profit to double on hot coal prices

South African thermal coal exporter Thungela Resources TGAJ.J said that it expected to report a 100% increase in 2022 earnings, driven by record high coal prices. In a trading update, Thungela said it expected headline earnings per share (HEPS) between 130 rand ($6.99) and 133 rand ($7.15) for the year ended Dec. 31, up from 61.08 rand in 2021. HEPS is the most common measure of profit in South Africa.

Coal prices surged last year as Russia's invasion of Ukraine in February 2022 worsened an energy crisis that started late 2021. A European ban on Russian coal tightened supplies and sent prices soaring, boosting the earnings of coal miners from South Africa and elsewhere.

South Africa's coal exports were, however, curtailed by state-owned logistics firm Transnet's inability to operate at full capacity due to a shortage of locomotives and spares, as well as cable theft and vandalism of its infrastructure. Thungela, which was spun off Anglo American Plc AAL.L in 2021 as the global mining giant moves away from coal, will release its financial results on March 27.

United States

U.S. coal exports remained relatively unchanged between 2021 and 2022

In 2022, 84.8 million short tons (MMst) of coal were exported from the United States, relatively unchanged from the 85.1 MMst exported in 2021. Steam coal accounted for 45% of all U.S. coal exports in 2022; metallurgical coal accounted for 55%. Steam coal, also known as thermal coal, is used by coal-fired power plants for electricity generation and by consumers to heat their homes or businesses.

In 2022, the five countries that received the most U.S. coal exports were India, the Netherlands, Japan, Brazil, and South Korea. India imported the most U.S. coal for the sixth consecutive year, at 15.5 MMst. Of that total, 55%, or 8.4 MMst, was metallurgical coal. The Netherlands received the second-most U.S. coal in 2022, 11.8 MMst with 54%, or 6.4 MMst, as steam coal. The Netherlands is primarily a transshipment hub that ships coal throughout Europe and retains only 10% of its imported coal for domestic use.

U.S. coal exports to Japan were split almost evenly between steam (51%) and metallurgical (49%) coal. Almost all U.S. coal shipments (91%) to Brazil were metallurgical coal for steelmaking. Most shipments to South Korea were steam coal for electricity generation (76%).

Renewable energy use surges past coal for first time in the US

More electricity was generated by renewable energy than coal last year, according to the latest government data. The use of wind, solar, hydro, biomass and geothermal also jumped ahead of nuclear power generation, reported the Energy Information Administration (EIA), after first doing so in 2021. The booming sectors of wind and solar were driving the transition to clean energy from planet-heating fossil fuels.

Combined wind and solar increased their share of power sector electricity generation from 12 per cent in 2021 to 14 per cent in 2022. Hydropower stayed the same at 6 per cent in 2022 and biomass and geothermal remained at less than 1 per cent. The share of coal-fired power dropped from 23 per cent in 2021 to 20 per cent in 2022 as some plants were retired, and others used less.

The electric power sector includes major utility companies and independent power producers but not industrial, commercial, or residential sectors, such as rooftop solar panels, for example. Nuclear power declined from 20 per cent in 2021 to 19 per cent in 2022 which EIA attributed to the retirement of the Palisades plant in Michigan.

Eastern US coal price moves likely to stabilize

Illinois basin and Appalachian coal prices in the US are likely headed toward a more stable period following last year's spike and recent steep declines. Thermal coal prices in the Illinois basin and northern and central Appalachia roughly doubled between October 2021 and July 2022 on better than expected domestic and international demand in the first half of the year as well as limited supply and elevated natural gas prices. that the European Commission again acceded to my appeal – especially when we cut off Russian energy sources and are accelerating the green transition,” tweeted Jerzy Buzek, a former European Parliament President and currently a member of the European Parliament.

During the height of the price gains, in the first full week of July 2022, Argus' assessment for prompt quarter Illinois basin 11,500 Btu/lb 5lb SO2/mmBtu coal jumped by $45/short ton to a record $200/st fob barge. Shortly before that, prompt quarter CSX rail-originated coal and Pittsburgh Seam coal prices increased by $28/ st and $50/st, respectively, in one week, also to record levels.

The last time prices climbed by similar levels was in 2008, when Argus assessments for Illinois basin and Appalachian coal more than doubled over the span of the first eight to nine months of the year By April 2009, Illinois basin coal was at a 14-month low and Pittsburgh Seam assessments were the lowest since November 2007. Central Appalachian CSX prompt quarter prices reached a 17-month low in May 2009.

The Commission’s decision to allow coking coal to remain on the list will facilitate gaining EU funds for future investments connected to coking coal and creating jobs, said Buzek, adding that coking coal is not only essential for Poland’s steel industry, but also for enabling the construction of wind turbines, solar panels and the development of the railway industry.

Russia has increased its coal exports to China by 214% since last year

Russian coal exports to China through the Zabaikalsk-Majshauli railway crossing have increased by 214% since last year, according to an announcement from the Russian Consulate General in the northeastern province of Harbin. According to the consulate, supplies totaled more than 438,000 tonnes in the first 40 days of 2023, with more than 6,200 freight cars of coal being sent to China.

Coking coal to remain on EU critical raw materials list

The updated list was published as part of the EU’s Critical Raw Materials Act, presented by the European Commission on 16 March. Polish company JastrzębskaSpółkaWęglowa S.A. is the EU’s largest producer of coking coal in the European Union.

“We succeeded! Coking coal will remain a raw material in the European Union. I am pleased

In the Asian nation's Heilongjiang, Jilin and Liaoning provinces, as well as the eastern part of the Inner Mongolia Autonomous Region, Russian coal is used to generate electricity and heat. Russia's Deputy Prime Minister Alexander Novak claimed earlier this month that Moscow plans to increase coal exports to China by 11.2% to 59.5 million tonnes in 2022.

The supply of coking coal to the steel industry has more than doubled as compared to last year. The EU import ban on Russian coal has caused Moscow to refocus its trade, resulting in an increase in Russian coal exports to China. Beijing's industrial activity has recovered after three years of COVID restrictions, and as a result, the city has significantly increased its coal consumption.

Coal more important as energy source for German electricity production

Coal gained importance as the most important energy source for electricity production in Germany last year. The share of electricity generated from coal-fired power plants, which are considered harmful to the climate, rose by 8.4 percentage points to one-third (33.3 percent) compared with 2021, the Federal Statistical Office said recently. The increase also helped offset sharp declines in electricity production from natural gas due to the Ukraine war and from nuclear power due to the nuclear phase-out, according to the data. The second most important energy source was wind power, whose share rose by 9.4 percentage points to just under a quarter (24.1 percent) after a comparatively windless previous year.

Overall, more than half (53.7 percent) of the electricity fed into the grid last year came from conventional energy sources such as coal, natural gas and nuclear power. However, due to the simultaneous reduction in generation at gasfired and nuclear power plants, the share fell by 8.7 percentage points compared with the previous year.

Due to the tense situation on the gas market as a result of the Russian war of aggression on Ukraine, significantly less electricity was fed into the grid from natural gas (minus 11.3 percent). Natural gas for power generation has to be imported almost entirely, while Germany is less dependent on imports for coal. Nuclear energy supplied only 6.4 percent of the electricity fed into the grid due to the nuclear phase-out (2021: 12.6 percent).

UK coal demand hits a 266-year low

Coal demand in the United Kingdom fell by about 15 percent in 2022, going so low that it broke a 266-year record. Not since 1757 has the country used so little coal about 6.2 million metric tons, according to a new analysis from the website Carbon Brief. That was just one year after the birth of Wolfgang Amadeus Mozart, the Austrian composer.

“Last time U.K. coal use was this low, Mozart was still in nappies,” tweeted Simon Evans, Carbon Brief’s deputy editor and policy editor. UK Coal demand skyrocketed during the Industrial Revolution of the 18th and 19th centuries and peaked at 221 million metric tons in 1956.

Much of the U.K.’s progress in phasing down coal can be attributed to the country’s 1956 Clean Air Act, which aimed to clean up pervasive air pollution in and around London. More recently, the U.K. has cited climate change in its pledge to stop using coal for electricity generation by October 2024.