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The country accounts for more than 90% of Africa’s coal use, with domestic production exceeding 250 million tonnes annually
South Africa is set to increase coal production and exports in 2025, even as the global market experiences a downturn amid waning demand, high stock levels and lower prices.
The International Energy Agency’s (IEA) Coal Mid-Year Update notes that South African coal output rose by 1% in 2024, reaching approximately 240 million tonnes, with projections showing a further 3% increase in 2025 to 247 million tonnes (Mt).
“As things stand today, with abundant stocks and low prices, and expectations of coal demand gradually reducing through 2026, global coal production is projected to decline by 1.4% in 2026, falling to 9.1 Bt [billion tonnes]. This would mark the first annual decrease since the recent peak, driven by weakening demand, high stock levels, and policy shifts in major markets.
“However, despite the decline, production will remain above the 9Bt threshold, highlighting coal’s ongoing role in the global energy mix,” says the report.
Europe to drive demand for coal from South Africa
The European Union’s decline in coal production will continue, with output falling 13% down to 209Mt, with the largest reductions occurring in Germany and Poland.
“Mongolia’s production will rebound 3% to 102Mt. Kazakhstan is projected to maintain production close to 110Mt, while South Africa is expected to see an increase of 3% up to 247Mt. Meanwhile, Colombia’s production is set to decline further, reaching 59Mt.”
The IEA notes that while global coal production is likely to reach a new peak in 2025, a 1.4% contraction is expected in 2026, falling to 9.1Bt – the first annual drop since the post-pandemic energy crisis.
This attributed to easing Chinese demand, high inventories and shifting energy policies, especially in advanced economies.
But coal exports from South Africa are also forecast to rise modestly in 2025, bucking a global trend.
Thermal coal trade is expected to fall by 7% to 1.1 billion tonnes, with major declines in exports from Indonesia and Colombia. In contrast, South Africa’s outbound shipments will benefit from increased European demand, spurred by reduced wind and hydroelectric power generation in 2025, says the report.
Thermal coal prices have returned to pre-crisis levels following the 2022 energy shock, with Australian benchmark prices now around $125 per tonne and Indonesian grades as low as $50. The pricing premium once enjoyed by thermal coal during the crisis has reversed, and coking coal has resumed its traditional cost dominance.
Despite global pressures, coal remains a backbone of South Africa’s energy system. The country accounts for more than 90% of Africa’s coal use, mainly consumed by the power, steel and cement industries.
Downward forecast for coal trading
The IEA has forecast that the global coal trade to decrease for a second consecutive year in 2026, marking an unprecedented occurrence in this century.
The main driver of the expected downturn is an ongoing reduction in China’s import demand. Chinese coal imports are forecast to fall by an additional 14Mt, exerting significant downward pressure on global trade volumes, which are expected to decline to 1.42Bt.
“While we have seen contrasting trends in different regions in the first half of 2025, these do not alter the underlying trajectory of global coal demand.
“We expect the world’s coal consumption to remain broadly flat this year and next, in line with our previous forecast, although short-term fluctuations remain possible in different regions due to weather conditions and the high degree of economic and geopolitical uncertainty. As in past years, global coal trends continue to be shaped overwhelmingly by China, which consumes almost 30% more coal than the rest of the world combined,” said IEA Director of Energy Markets and Security Keisuke Sadamori.
The power sector remains the dominant source of coal demand in China and globally. But industrial use of coal in China, particularly in steel and chemicals, is also large enough to influence global trends.
Global coal production is expected to rise to a new record in 2025, driven by continued output growth in China and India, which rely on coal for ensuring their energy security priorities. However, the report anticipates a decline in global coal production in 2026, as high stock levels and lower prices begin to weigh on supply.
Source: ESI AFRICA
