China’s 15% tariff on coal shipped from the US will likely leave the global market for the energy commodity precarious in terms of supply, pricing and marketing, but could also provide an additional opportunity for smaller suppliers to the Asian giant such as South Africa.
US President Donald Trump imposed a broad-based 10% tariff on Chinese imports last weekend, with the new measures coming into effect this week. This has prompted China to impose a 15% tariff on coal and Liquefied Petroleum Gas (LPG) imported from the United states in addition to a 10% tariff on oil imports from the world’s biggest economy.
Although South Africa is a small exporter of coal to China, it has become a big player on the international coal market. The Richards Bay Coal Terminal processed about 400 000 tonnes of coal exports to China last year, while India took up the biggest chunk of coal shipments from South Africa.
Bruce Williamson, a mining analyst for Integral Asset Management, said on Tuesday that at the global scale, “The various sources of energy such as coal, oil, gas, uranium, hydro, bio, solar, wind and other are all connected” with developed markets having the ability to switch across sources.
“Certain countries may have maintained their power sources and grids, and are able to switch from coal to oil or gas, or supplement with renewables. But timing can become a problem,” said Williamson.
According to LWS Financial Research, China imported a record 542.7 million tons of coal in 2024, more than double that of India at 250.2 million tons the same year.
“This represents 41% of global trade, according to customs data. China preferred foreign coal for lower price while India opted for cheaper suppliers such as Indonesia and South Africa,” said LWS Financial Research.
Williamson said it was difficult to determine what the actual impact of China’s 15% tariff on US coal and the likely resultant trade wars between the two would be.
“It is impossible to know exactly how harsh the inter-country final tariffs will be as we can’t see the small print,” he said.
It was possible that a clearer picture would emerge although he explained that if the tariff wars get out of hand, “growth will slow and that is negative for” everyone.
It remains to be seen whether Trump will retreat on some of the tariffs and whether some bigger EU members will opt to side with China and also introduce stiffer tariffs.
For South Africa, coal which has recently been classified as strategic by Mines Minister Gwede Mantashe, is a major export earner. In November, data from Statistics South Africa shows, South Africa’s coal production sagged by 1.6% although sales for the commodity increased by 8.5%.
BUSINESS REPORT