export coal is sold on an FOB basis typically (free on board (a...

export coal is sold on an FOB basis typically (free on board (a ship))

the advantage of this is a higher headline price, the disadvantage is that one has to take this price and subtract all the costs back to the mine.

i.e. the coal miner pays to get it to the ship (loading, rail, unloading, storage, insurance, reloading charges all apply).

with domestic arrangement like the CSA the coal is effectively sold on a mine gate basis.

thus whilst the per tonne headline sales price is lower...the overall cost of production to point of sale is also lower.

the important point is that its the NET MARGIN that is important.

again id make the point that the mining margin generated by this is UNV's business.

ESKOM are a paristatal and what they charge for electricity is their business.

interestingly this CSA is of a "new" type that ensures a symbiotic relationship.

in the past ESKOM have indeed been guilty of gouging...BUT this simply led to lower coal production and coal shortages and power shortages.

commercial protections exist to ensure this doesnt happen here.

hope this helps