Demand for affordable energy sources such as thermal coal escalated amid the energy security crisis exacerbated by the escalation of the Russia-Ukraine conflict, South Africa-based Thungela Resources Limited said in its H1 2022 interim results statement.

Supply constraints in major coal-producing regions resulted in the price of thermal coal increasing to unprecedented levels, the Johannesburg Stock Exchange-listed thermal coal exporter added.

“Energy security, reliability and affordability concerns in Europe have highlighted the importance of coal in the energy transition, July Ndlovu, CEO of Thungela Resources, said in the statement.

“Coal is set to remain a critical input for affordable and reliable power generation, not only in the developing world but also in highly industrialised and developed nations, which have recently increased their reliance on coal to meet their energy needs. 

“We are monitoring these trends and their implications for Thungela’s strategy in the short to medium-term, with particular attention to exploring opportunities for geographic diversification,” he added.

Coal sales from South Africa to Europe have increased eight-fold in the first six months of 2022 year-on-year, digital newspaper Africa News reported, quoting the coal exporter.

The European Union banned Russian coal imports in response to the invasion of Ukraine in April, but the ban took effect on August 10 as part of the wide-ranging sanctions.

European countries, which previously imported 45% of their coal from Russia, have been swapping expensive natural gas for coal from Colombia, Australia, the US and South Africa, the news report said.

The Netherlands, Germany, Poland, Denmark, France, Italy and Ukraine are among European countries importing growing quantities of coal from South Africa.

In the first five months of this year, European countries imported more than three million tonnes of coal from South Africa, up 40% more than the total volume in 2021.

Meanwhile, South Africa’s Richards Bay Coal Terminal data showed it delivered 3.24 million tonnes of coal to European countries by May-end, 15% higher year-on-year. 

(Editing by Seban Scaria seban.scaria@lseg.com)