Rising Australian coking coal prices, supply tightness, a slowing European economy, and healthy demand from the ex-China market in Asia are feeding uncertainty in metallurgical coal and coke markets, according to traders, buyers and sellers who attended the Eurocoke conference in Amsterdam in mid-September.
Supply tightness in the Australian prime hard market was the key talking point as prices rose during the week breaching the $300.00/t FOB mark, up $30/t week on week.
Some market participants also argued that high coking coal prices were unjustifiable when met coke could be secured cheaply.
Australian coking coal prices were assessed at $311.25/t FOB for both McCloskey prime low vol (MCC1) and prime mid vol (MCC2) on 19 September, up 11% from $281.25/t FOB for both MCC1 and MCC2 on 13 September.
An Australian producer said there is a global shortage of coking coal and investments in new projects is limited.
“The scrutiny around coking coal projects and emissions is greater than any other industry, hence supply is always under question which means prices are likely to stay high,” a European trader said.
Meanwhile, suppliers from the US said demand from Asia was robust and they were mostly focused on CFR deals from Southeast Asia.
“Indian steel mills are getting in touch for low-vol, high-vol coals for use in their blend mix and Chinese enquiries are also on the rise. The domestic US market is flat, but I would say prices are unlikely to fall. But there is no direction to this market really, it changes every week,” a US producer said.
McCloskey's assessment on 15 September pegged HVA at $252.38/t FOB (MCC8), marginally more than US low-vol, assessed at $251.52/t FOB.
Metallurgical coke availability from Colombia is good but high domestic coking coal prices are eroding margins. Recent prompt deals by traders have concluded at sub-$300/t FOB Barranquilla for CSR 65/63, but several Colombian coke producers termed these as “loss making”.
Coke producers from Poland and Colombia said there was some coke demand from Turkey and Brazil for November and December but there is stiff competition from Indonesian and Chinese coke sellers.
“Coke prices are going to see a recovery as coking coal prices are rising but demand fundamentals for Europe are weak,” a large European steel mill source said.
Demand fears from Europe were further exacerbated with Europe’s largest economy, Germany, contracting by 0.40% this year, 0.60 percentage point lower than May estimates. The European Commission has also cut its growth estimates for Germany for next year to 1.10% from 1.40%.
© 2023 Dow Jones Energy Limited. All rights reserved.
South Africa's Manganese Metals Company (MMC) is progressing plans to become a key supplier of ultra-pure manganese into the growing global electric vehicle (EV) market.
The promise of a burgeoning EV market presents a new venture for the manganese processing business, which is engaging with South Africa's state-owned Industrial Development Corporation on plans to develop a small-scale 5,000 t/y manganese sulphate monohydrate (MSM) production plant, with a view of exporting MSM to the global market.
Manganese has been touted by the likes of Tesla's Elon Musk as a cheaper, greener and plentiful alternative to lithium and nickel for use in car batteries, which would significantly bring down the cost of electric vehicles, boosting penetration of greener automotives in global markets.
To be effectively used in such batteries, the battery-grade manganese must be of an exceptionally high purity. MMC is currently the only company outside of China that processes manganese to battery grade.
"The only game for us is to be the best quality, cheapest producer outside of China," said Bernard Swanepoel, MMC chairperson. "We think we'll find a niche in the space …That has been this business' positioning for the last 50 years. We have a footprint, an existing operation, and 600 of the world's experts in manganese making. And we're going to use that to demonstrate that we can go into an adjacent space, a new area."
The niche operation based in Mbombela in Mpumalanga has since 1974 produced manganese metal for the steel and aluminium industries.
Formerly a subsidiary of BHP Billiton – but privately-owned since 2010 – MMC produces 28,000 t/y of 99.9% manganese from a long-term supply of high-grade fines from the Wessels mine, which is now owned by South32. MMC's metal production does not utilize selenium, a hazardous substance used in the processing of manganese in China, the world's largest supplier.
The company supplies its product to over 100 customers – largely in the steel and aluminium industries – in 20 countries, with Japan currently being the largest market for MMC.
The MMC operation is a relic of the apartheid government, which sought to establish an industrial zone in the unlikely Nelspruit area. As a result, a rail line to move product from some 930 km away in the Northern Cape to MMC was established, as well as a line that facilitates the movement of the final product (electrolytic manganese metal in the form of manganese flake) to the port of Maputo. The line to Maputo has been out of operation since the COVID-19 lock down in April 2020. Trains carrying manganese fines are now rarely received from the Northern Cape.
The logistics costs, the increasing cost of electricity inputs and the volatile manganese price has rendered MMC a marginal business.
The EV market presents a new growth opportunity for the company to expand from metal production to manganese sulphate production.
Engagements with the IDC have progressed well with an outcome on a funding decision to establish a small-scale production facility is anticipated in coming weeks.
Jupiter – an Australia-listed junior miner producing manganese from the Tshipi Borwa mine in the Northern Cape – has also outlined plans to produce high purity MSM with partners in Europe or in North America where various incentives are stoking green industrialization activities.
Swanepoel said many junior miners in the manganese space are talking a big game about MSM, but he believed MMC's efforts are to be taken more seriously as it is far advanced in developing the world's purest and cheapest MSM.
MMC said it is confident of its long-term supply of fines for as long as the Wessels mine remains in operation for the next 40 years or so.
According to Madelein Todd, chief marketing officer at MMC, demand for MMC's produce will be driven by a desire for traceability and for diversification of sourcing so as not to be beholden to China and or to a single country. Demand will further be kick-started by legislation that's currently being drafted such as the European critical raw materials act, or the "battery pass" for the carbon border adjustment mechanism.
Energy supply will however be key for sustainable and attractive production of MSM as it is clear that continued supply from only Eskom's coal-fired generation is not desirable for potential investors nor customers in the long term.
According to MMC CEO, Louis Nel, MMC is looking at alternatives and has already been wheeling electric hydropower from Lydenburg over the last 18 months. "We've also got a hydropower station in the Crocodile River, 1.8 MW, that is being commissioned as we speak, … and we've gone through the process of selecting a vendor for solar PV, to make sure that that we look at renewables in terms of our energy supply."
© 2023 Dow Jones Energy Limited. All rights reserved.
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