South African Mines allowed to resume Operations at 50% Capacity

After the lockdown in South Africa was extended few days back till 30 Apr'20 amid ongoing COVID-19 pandemic, the government has allowed the mining sector to ramp up to 50% of its productive capacity over the next two weeks as part of its plans to slowly relax COVID-19 related lockdown regulations.

The government has taken this decision on the basis that in case an active mine is left without activity for the long time, it poses the danger of rockfalls and increases the chances of seismicity.

Apart from this, the mining companies are also being asked to arrange for the transport of South African miners back to the operations.

While the coal mines that provide coal supplies to Eskom have been running mostly at full capacity, other small miners will be able to resume their operations with this decision. However, those mines that are lacking cash flows might not be able to re-open.

The South African coal mining sector has taken massive hit with many companies paying wages to workers even when there has been no production, and commodity prices have generally been in free fall because global demand has been killed.

The API4 index price for RB1 has fallen to USD 58-59/MT this week (down by USD 2-3/MT w-o-w basis) whereas that od RB2 and RB3 grade are being heard in the range of USD 45-46/MT and USD 37-38/MT, FoB basis at RBCT port.

South African bank pulls back from financing new coal-fired plants

After the Japanese megabanks, the next bank to rule out funding for new coal projects is South Africa's ABSA Bank. As per the latest updates, Absa bank will not fund new coal-fired electricity generation unless under extenuating circumstances that will be governed under strict guidelines," it said in a statement.

The bank also added that the financing of new coal-fired industrial boilers and furnaces and project using metallurgical coal will also be subject to enhanced due diligence criteria.

The major banks across the globe are revising their policies and are pulling back from further financing coal-fired plant projects in order to support the Paris Agreement on climate change. Japanese megabanks such as Mizhou Bank and SMBC have also announced this week of their decision to stop lending to the coal-fired projects.