The positive mood of Wescoal’s latest trading update, combined with surprising strength in coal markets, probably point to an increased dividend for its financial year to March. Whether it continues to focus on Eskom or manages to increase its exports, Wescoal is in a good place. Eskom’s corporate governance problems and surplus of electricity generation are not having a damping effect on coal prices. The utility is now having to sign up new short-term supply as long-term contracts come to an end and lack of investment in the large mines owned by multinationals is starting to bite. The utility will be phasing out older coal power stations in the next few years, but Medupi and Kusile are still ramping up. At the same time, seaborne coal demand continues to be solid. RBCT API4 coal index prices have climbed steadily since May 2017 and are now at $97.35/tonne. Japan has been growing its coal imports as the restart of nuclear reactors after the Fukushima disaster has been slower than pl...
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