Maguire: USA delivers record amounts of thermal coal to Africa

The opinions expressed here are those of the author, a Reuters columnist.

By Gavin Maguire

–According to ship tracking data from Kpler, the United States shipped a record 6.1 million tons of thermal coal – used primarily for power generation and in industrial boilers – to Africa in the first eight months of 2024.

This total is 83% higher than the same months in 2023 and ensures that the US will be Africa's largest supplier of thermal coal to date in 2024, accounting for a record 64% of total African thermal coal imports.

Combined with 11.1 million tons of exports to Asia – the largest U.S. market for coal – shipments to Africa helped push total U.S. coal exports to the third-highest level ever in the first eight months of the year.

This continued high level of coal exports undermines efforts by the United States and other countries to reduce the use of coal for electricity generation, since burning coal to generate electricity produces significantly higher emissions than other fossil fuels.

Given the continued high level of US coal exports, there is a risk of a backlash from international climate activists who expect the US to take a leading role in efforts to curb the sale and use of coal.

TOP MARKETS

This year, US exports exceeded 22 million tons in September for the second month in a row, meaning the country's annual coal exports are on track to reach the second or third highest level ever.

The country's record coal exports of 39.1 million tonnes were recorded in 2018, according to Kpler data, and are not expected to be surpassed in 2024.

The largest market for US coal this year was India, which consumed 7.3 million tonnes from January to August. India is the world's second-largest consumer of coal for power generation after China.

Morocco and Egypt were the next largest markets for U.S. coal this year, shipping 3 million and 2.9 million tons of coal respectively through August.

China (1.8 million tons), the Netherlands (1.4 million tons) and Japan (875,000 tons) have been the next largest destinations for US coal so far this year.

AFRICAN GROWTH

According to Kpler, total imports of thermal coal by African countries from January to August amounted to 9.48 million tonnes.

While this total was 0.5% lower than the same months in 2023, it was the third highest ever recorded for the continent and underscores that Africa is an important market for coal exporters.

Over the past two years, Africa's imports have increased by 12%, and since 2022, Africa is the only major region, along with Asia, to see an increase in thermal coal imports.

During this period, imports to Europe, North America and Oceania all fell by at least 20%.

Morocco, Africa's largest coal importer, uses coal primarily to generate electricity, generating about 64 percent of the country's electricity from coal, according to Ember.

Although Egypt does not have any coal-fired power plants, it uses thermal coal to produce cement and other industrial processes that require cheap heat.

South Africa is by far the largest consumer of coal in Africa, but due to high local coal production it is a relatively small importer.

Zimbabwe, Botswana and Zambia are other major African coal users for industry and energy, but they all have no access to the sea and are mainly supplied by truck from South Africa or through local production.

HOUSING MARKETS?

This means that Morocco and Egypt in North Africa represent the best options for coal exporters looking to increase their market share in Africa.

And these countries are particularly attractive to U.S. suppliers because they can reach the region's coal ports relatively easily across the Atlantic.

According to LSEG, the travel time for a bulk carrier transporting coal from Baltimore – the US's main coal export port – to the Casablanca bulk terminal in Morocco is just under 11 days.

This journey is almost a week shorter than from South Africa and means that Moroccan buyers are served more quickly by sellers in North America than by miners based on the same continent.

US exporters can also supply Morocco with coal more quickly than Colombian and Russian suppliers. They are therefore likely to remain an important supplier for Morocco in the future. According to Kpler, Morocco imports around 750,000 tons of coal per month.

The travel time to Egypt is an additional six days by sea from Baltimore, thus representing a longer commitment for US exporters.

Egypt's average import volume is also significantly lower than Morocco's, standing at around 400,000 tonnes per month so far in 2024, according to Kpler data.

However, this import average is 100,000 tonnes per month higher than in 2023, suggesting that Egypt's total coal demand has increased by over 30% so far this year.

In contrast, Morocco's monthly thermal coal demand is about 8% lower than the 2023 average, suggesting that Morocco's total coal demand may already have peaked.

For coal exporters seeking to maximize their sales volumes, Egypt represents a rare bright spot and a potential entry point into other fast-growing economies in North Africa that need cheap fuels for power and industry.

These growth trends may be at odds with the United States' stated ambitions to reduce global coal consumption.

But as long as there is international demand for coal, U.S. exporters are in a strong position to meet it, especially in local markets.

Reporting by Gavin Maguire; Editing by Lincoln Feast.