SOUTH African coal exports were set to decline as the country didn’t have sufficient infrastructure to exploit the Waterberg – a large, well-known coalfield, situated in Limpopo province, which is mostly undeveloped.
“The future of our coal in South Africa is in the Lephalale-Waterberg basin,” said July Ndlovu, Anglo American Coal CEO, in an interview with FIN24 Speaks. The infrastructure required to export the coal was not in place, he said. “Given our competing economic needs as a country, it would take us sometime to invest in that infrastructure.”
The bulk of the country’s coal production is from Mpumalanga’s Witbank region, but resources are being depleted. By contrast, some of the Waterberg region’s coal reserves are as high as 75 billion tons, about 40% of all remaining reserves, said Fin24.
Anglo American is expected to unveil plans in the next two to three years to float off its coal resources, or sell them outright via a trade sale. This is owing to shareholder pressure on the firm’s greenhouse gas emissions which it had promised to reduce.
However, the coal business has recently diversified its sales base. “We took a decision about a year or 18 months ago to diversify our market, we started selling some our coal to markets like Vietnam, South Korea and Pakistan. As a consequence of that, we were able to significantly mitigate the demand shortfall,” he said.
The thermal coal price has been under pressure since the beginning of the year and exacerbated by the lockdown in China which is a major importer. Ndlovu, however, said there was ground for some optimism: “As economies are beginning to come out of the lockdown, we could start to see demand picking up”.
“Prices suffered quite heavily, but they have somewhat recovered … but we are nowhere near where we need to,” he said.