MC Mining: Anti-fossil fuel trend and war resulted in record coal prices
MC Mining has announced a six-month extension of the July 2022 Coal Sales & Marketing Agreement between the Company’s subsidiary Uitkomst Colliery and Overlooked. The Marketing Agreement was due to expire on 31 December 2022 and has now been extended to 30 June 2023, with the key terms of the Marketing Agreement remaining.
The prevailing anti-fossil fuel sentiment and invasion of Ukraine earlier in 2022 has resulted in a global energy shortage and record international thermal coal prices. The coal sold between July and November 2022 under the terms of the Agreement, realised an average free-on-board price of $237/t, significantly higher than domestic coal sales prices.
The salient features of the Marketing Agreement and the Extension thereof are:
- contract now expiring in June 2023;
- from 1 January 2023, sale of a minimum of 15,000t of Uitkomst coal per month at API4-linked, US dollar denominated prices;
- Overlooked is responsible for the transportation, stockpiling and export of the coal at port and will receive a market related commission; and
- Overlooked charges a competitive marketing fee of 5% of the sales price, which is reasonable considering competing proposals received by Uitkomst, for providing access to the international market.
Godfrey Gomwe, Managing Director and Chief Executive Officer of MC Mining, commented: “Uitkomst produces high quality coal but does not produce sufficient volumes to fill a ship on a monthly basis and the partnership with Overlooked has generated significant benefits for Uitkomst, facilitating an export route to market and access to higher international thermal coal prices. The sale of the initial 120,000t is not expected to be completed by the end of December 2022, mainly due to shipping delays, with 36,764t currently stockpiled at the harbour and the remaining 11,281t at Uitkomst. The Uitkomst Colliery continues to supply coal to the local market, but at reduced volumes.”
