Europe’s winter extends coal’s hot streak

Europe is entering what will likely be a bitter winter, as a Russia-induced energy crunch threatens power supplies and the continent is sent into a recession.

A tight energy market — made worse in recent weeks after Russia’s state-owned natural gas exporter Gazprom closed its main pipeline to Germany — has been a boon for South Africa’s coal exporters, which have enjoyed higher prices amid stronger demand.

Europe’s winter is set to extend coal’s hot streak, even as the world turns to renewables. However, efforts to initiate a green economy will continue to threaten producers, who find themselves increasingly on the outs.

The coal price surged to a new record high of around $460 per tonne earlier this week, amid continued robust demand and persistent Russia-related supply disruptions. The International Energy Agency (IEA) sees coal consumption in Europe rising by 7% in 2022 on top of last year’s 14% surge, with the continent now turning to seaborne coal from South Africa and elsewhere in the world.


In another statement representing the energy minister’s cynicism towards the green transition, Gwede Mantashe reportedly said last week that the excitement of moving from coal to renewables was becoming a myth and that Germany had painfully learnt of its effect on energy security.

A similar statement was made in coal exporter Thungela’s interim results, released almost a month ago. Thungela is South Africa’s largest exporter of power-station coal.

“Energy security, reliability and affordability concerns in Europe have highlighted the importance of coal in the energy transition, as it will remain a critical input for affordable and reliable power generation,” the results presentation noted.

Thungela, like other South African coal miners, recorded a stunning leap in earnings in the first half of 2022. The company’s net profit soared to R9.6-billion from the R351-million it made in the same period last year.

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