from Mac Bank research
A number of recent events have prompted us to become even-more bullish (than extremely bullish) on coking and steam coal prices. The Chinese government moved to restrict exports of steam coals; Macarthur coal announced force majeure on deliveries from Copabela and Moorbale (total capacity 5.7mtpa of PCI coals) – it may take three weeks to pump the water from the mine; and Wesfarmers announced force majeure on deliveries from its 8.7mtpa Curragh coal mine (6.5mtpa coking and 2.2mtpa steam coal). In addition, Eskom, South Africa’s state-run electricity provider, cut power to its industrial customers, including major thermal coal mining operations (only the export operations), as well as to various gold and platinum mining operations.
In particular, Anglo American announced that power to five of its South African thermal coal mines would be halted indefinitely. Anglo exported ~22mtpa of thermal coal from these mines in 2007. Macquarie’s South African team has reported that it is not yet known how long the current "black-out" will continue, but they believe that the blackout is likely to be the first of many and that any lost production resulting from blackouts will not be recoverable because operations are already running at full capacity. Eskom states that the current power status could persist for up to four weeks.
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