SA coal strike may hit exports

LONDON/JOHANNESBURG – A strike by South African coal workers at major mining houses on Monday will start to hit exports in two to four weeks, after stockpiles are used up at the mines and Richards Bay Coal Terminal (RBCT), mining industry sources said.

Coal prices twitched slightly higher by around 50 US cents to US$115 a ton on Friday in anticipation of the strike and by another 50 cents on Monday. Until exports are cut, prices are unlikely to show much reaction, coal traders and utilities said.During the past several years, strikes in the coal industry have been rare and fairly short-lived. But industry sources said this strike appeared to be different because the unions seemed determined to hold out for a pay raise nearly double the mining firms’ offer.’I don’t think this is going to be over in a few days. It looks like it’s going to drag on,’ one senior mining official said.’Everybody I’ve talked to has the view that this one is unique and the negotiations have not been pretty,’ another mining source said.Around 150 000 miners represented by the National Union of Mineworkers (NUM) and Solidarity at Anglo Thermal Coal SA, Xstrata Coal, Exxaro, BHP Billitonand Optimum Coal went on strike on Monday in pursuit of a pay rise of up to 14 per cent.POWER CONCERNSThe big miners affected, which account for around 50 per cent of RBCT’s coal exports, said they were just as concerned about potential power shortages due to reduced domestic coal supply as they were about the strike’s duration, because power cuts would hit output.Utility Eskom has about 38 days of coal in stockpiles on average, but the levels vary at different power plants.Smaller coal miners still in wage talks said they were worried out power cuts but also feared a worsening shortage of explosives needed for mining and that sympathy strikes could spread.The Chamber of Mines, is negotiating on behalf of the big miners which aligned their pay and benefits packages several years ago, has offered 8,5 per cent.South Africa, which is likely to export around 60 million tons of thermal coal in 2011, is one of the world’s top five exporters and a major supplier to Europe and increasingly Asia.’If it’s a few days or a week, it shouldn’t be too bad, but if it’s longer than that … If we don’t produce coal, the first to be affected will be exports,’ said Xavier Prevost, a Johannesburg-based independent coal analyst.Current stockpiles give the big miners a cushion, but it will not last longer than a few weeks, sources at mining majors and junior coal miners said.’There’s a bit of fat in the system. Most people have reasonable stocks at the mines and at Richards Bay, but one of the other big players doesn’t have so much,’ said a source at one of South Africa’s biggest exporters whose workers are on strike.’The key thing is the railings, and Transnet is moving 1,4 million tons a week to the bay, so you’ll quickly see who’s most affected because they’ll soon be cancelling trains because they don’t have the output to move,’ he added.Stocks at RBCT on Monday were around 3,5 million tons, a comfortable level from which to load shipments in the immediate term, they said.’There hasn’t been any impact on our side yet. We have enough stocks at the moment,’ said RBCT Chief Executive Officer Raymond Chirwa.-Nampa-Reuters