We would love to hear your thoughts about our site and services, please take our survey here.
Positive coverage
https://www.cityam.com/drax-exploring-3bn-expansion-drive-with-north-american-biomass-plants/
Beijing also wants downstream sales prices to be controlled, though it will let local governments set standards to limit the price of local coal trading, the people said. Coal importers will obtain subsidies to balance their losses.
https://twitter.com/Sino_Market/status/1453279873422827527?s=20
There's plenty of good reasons for July to keep things downbeat in regard to the SA politics.
The country's sole generator is the state owned Eskom. They are under-producing electricity and the way this is managed is by rolling power cuts. This is a very serious political problem.
To Quote Bernard Dalton, executive head of marketing for Thungela Resources. 16/5/21
“Eskom has a number of long-term contracts tied to collieries that are ending soon … it will be forced to pay a higher cost for coal given inflation,” he said. Eskom could be forced back to negotiate as early as this winter in order to meet short-term coal requirements, he said.
So on the domestic front there is huge pressure for Eskom to burn more coal to keep the lights on, but Thungela needs to lift the supply contracts prices.
If I were CEO , I would not want to be celebrating huge windfall profits whilst negotiating contracts with the State generator. I would keep silent about revenue and make negative statements about the failure of the state owned railway and how it was affecting exports. This would be a good political strategy.
Enviva reported on Friday "Enviva announced the signing of a new 5-year take-or-pay off-take contract to supply British renewable energy company Drax Group PLC ("Drax") with 200,000 metric tons per year ("MTPY") of wood pellets. Deliveries related to the contract are scheduled to commence in 2022. This is the fourth contract signed with Drax since Enviva’s IPO in 2015, and demonstrates the long-standing relationship between Drax, the world’s largest consumer of wood pellets, and Enviva, the world’s largest supplier."
It looks like the RBCT facility is unaffected. The Richards Bay coal terminal facility is owned by Thungela, Exxaro Glencore & others and I am guessing that this is the one Thungela uses. Its on the south side of the harbour. The Transnet owned facility where the fires are taking place is on the northern side of the Harbour.
Hopefully we get an RNS in the morning
Force majeure declared at Port of Richards Bay
Following the massive fire that enveloped the conveyor belt system at the Dry Bulk Terminal in the Port of Richards Bay over the past two days, Transnet has declared force majeure at the port ‘until further notice’.
The blaze started at around 7pm on Wednesday and appeared to have been extinguished only to flare up again at 7.30am before the fight was finally won at 9am.
The Foskor sulphur import conveyor belt was totally destroyed while the Grindrod export coal route was also rendered inoperable.
The Silvacel woodchip route was affected but still able to operate but all conveyor routes have been shut down according to a statement issued by Transnet Port Terminals Richards Bay acting chief executive Jabu Mdaki.
https://zululandobserver.co.za/258647/force-majeure-declared-at-port-of-richards-bay/
“There may be some occasions when we see exports to continental Europe, however this is unlikely to be during peak times and should GB experience some tight/stress periods, we would expect GB prices to escalate and interconnectors to import,”
– National Grid ESO Electricity Winter Outlook
* Structural vulnerabilities in the power market makes security of supply less assured*
National Grid ESO’s Winter Outlook sees a capacity margin of 3.9 GW, or 6.6%, lower than the 4.3 GW or 7.3% it anticipated in it’s early outlook published in July with a loss of load probability of 0.3 hours, up from 0.1 hours in the early outlook. The reasons for the deterioration are changes to the generation mix with slightly lower gas-fired generation and the IFA outage which has removed 1 GW of interconnector capacity since the early outlook.
Unfortunately National Grid ESO has left its nuclear forecasts unchanged, which it explained in the early outlook was based on average availability over the past 3 years. This may be optimistic: as these assets age their reliability is rapidly declining. Right now, EDF has two reactors on planned maintenance, and five on un-planned outages, with seven reactors operating at normal full load. The winter outlook assumes a de-rated capacity of 5.4 GW for nuclear this winter (versus base case installed capacity of 7.1 GW, with a 75% de-rating factor). The reactors currently on un-planned outages have a combined capacity of 3.4 GW representing 2.6 GW of de-rated capacity or two thirds of the capacity margin.
https://watt-logic.com/2021/10/15/security-of-supply-3/
PIC's investment strategy is mostly a passive tracker of the JSE!
Approximately 80% of the listed equities portfolio is managed internally on an enhanced index or ‘passive’ basis, which allows the clients to benefit from the significant saving in management fees, without compromising on performance. External managers manage the remaining 20% of the portfolio, presenting the opportunity to focus on active asset management, to maximise returns for clients.
Our investment mandate prescribes that up to 10% of its AuM can be invested outside of South Africa. Five percent of this is invested in offshore equities and the remainder in the rest of the Africa continent, excluding South Africa.
https://www.pic.gov.za/Pages/listed.aspx#shortpoint-tab-1=shortpoint-gt-1-i-1
I wonder if our biggest holder , the South African state pension scheme, is continuing to shed its shares.
They may be looking for another ESG award!
https://www.pic.gov.za/Pages/esg.aspx
The process of producing silicon for uses huge quantities of coke and electricity. Silicon metal is an industrial additive produced by smelting quartz and coke in an electric heating furnace. This is a hugely coal intensive process.
This is what they make solar panels from!
https://www.straitstimes.com/business/economy/silicons-300-surge-throws-another-price-shock-at-world-economy
This is probably a good time to repost the article by Dr Matthew Partridge in Moneyweek from June.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history.
"One problem was that many big funds cannot hold Thungela because it has a market cap of only £150m, and is thus too small to meet their investment mandates. However, the flop also suggests that markets are only approaching coal stocks with “an extremely long barge pole”, says Ed Cropley on Breakingviews. Nevertheless, despite its poor reputation, coal could have “a long future”, as some analysts reckon it will still comprise 31% of global power generation in 2030, thanks chiefly to South Asian economies “being slow to switch to green energy”.
https://moneyweek.com/investments/stockmarkets/603376/anglo-americans-coal-spin-off-thungela-resources-fails-to-catch
This news from April 13 this year is gaining significance as the price of energy is rocketing!
"Drax has completed the acquisition of Canadian wood pellet manufacturer Pinnacle Renewable Energy, tripling the UK company's annual capacity from 2022, Drax said April 13."
This transformed the company into an international business trading bioenergy from the North America continent to Europe and Asia, "with the market for biomass pellets for renewable generation in Europe and Asia expected to grow significantly," Drax said.
https://www.spglobal.com/platts/en/market-insights/latest-news/coal/041321-uks-drax-completes-acquisition-of-canadian-wood-pellet-company-pinnacle