Sergio Leone’s classic spaghetti western, ‘The Good, the Bad and the Ugly’, may not have much in common with southern Africa’s coal industry. But according to Mitchell Hugers, Commodities Analyst at BMI Research, the film’s title is a pretty good summary of the state of the coal industry in southern Africa.
That industry is dominated by South Africa – ‘the ugly’ in Hugers’ analogy. It accounts for some 94.6% of the region’s production, dwarfing that of Mozambique (the bad) and Botswana (the good). Yet even with South Africa among its ranks, the coal industry of southern Africa is still relatively small. According to BMI Research, it will account for only 3.7% of global output in 2016 – some 270 million t.
That share will not rise substantially to 2020. But despite its small size, what happens in southern Africa still matters on a global stage – particularly as it relates to India. South Africa’s thermal coal is currently pushing out significant volumes of Indonesian coal in India’s import mix: such competition is at least partly responsible for a dramatic fall (some 50 million t) in Indonesian coal exports in 2015.
Meanwhile, Indian companies are set to play an important role in developing Mozambique’s metallurgical coal assets. That trend could prove worrisome to traditional metallurgical coal suppliers to India, which will continue to need the steelmaking ingredient even as the country seeks to become self-reliant in thermal coal.
Note: This article first appeared in the February 2016 of World Coal as part of a report on southern Africa’s coal industry. Read the rest of the report below:
About the author: Jonathan Rowland is the Editor of World Coal.