The decline of coal imports from South Africa to the UK
Once a swing producer itself, the UK has resorted to importing coal from overseas in recent years. While still a major industry, the global coal trade has experienced a significant decline in the decades since 1990. Due to the rise in renewable energy and the switch to more environmentally friendly options, coal has fallen into disfavour. Despite its bad rep, coal is still one of the world’s most actively traded commodities.
Owing to a decline in the primary production of coal, the UK is now heavily reliant on imports, mainly from Russia, Colombia and the USA. Up until 2006, South Africa was the United Kingdom’s main supplier of solid fuels. The United Kingdom became the second largest importer of coal in 2012, leaving other EU member states lagging behind – a fact that can be widely attributed to the high costs of producing coal in the UK and the closure of most coal mines following the 1994 privatisation of British Coal by the then prime minister, John Major. Along with imports from Australia, Colombia and Poland, South African coal dominated the UK market in the years from 1998 to 2006, when imports from Russia and the USA experienced a sharp increase. Australia, who had until then been the largest supplier of coal with a worldwide market share of 21%, began exporting coal to China.
Following political turmoil in South Africa and the abandonment of a large number of coal mines, the country’s position as a prime exporter of coal has been in steady decline since 2006. The downturn in coal production and export has led to environmental concerns regarding South Africa’s abandoned coal mines: many of these site haven’t been rehabilitated and are now major sources of air and water pollution.
Russia, on the other hand, is a veritable energy powerhouse with no plans of slowing down. In addition to its oil and gas exports, the country’s coal exports have also been steadily rising since 2000. Russia’s geographical position is conducive to the export of coal and other commodities to both Europe and Asia. Being adapted to smaller ships, Russian coal begins its journey in the port of Murmansk and can easily be accommodated by UK ports used in dealing with smaller ships. South African coal is shipped to the United Kingdom via the ports of Amsterdam or Rotterdam, both of which deal with larger vessels that are not as good a fit for UK ports as their Russian counterparts.
Further reasons for the rise in the popularity of Russian coal include its abundant reserves and its competitive price. Russia’s coal reserves are the second largest in the world and are only exceeded by those of the United States. Since the collapse of the Soviet Union, Russia has experienced exponential growth across all industries, making it a major exporter of hydrocarbons and other commodities. While coal production stalled in the wake of the 1998 financial crisis, the country’s output steadily rose in the following years, reaching its peak in 2012. The global financial crisis of 2008 marked another bleak era for Russian coal, but the market was able to recover when prices began to rise in 2010.