November 10, 2024 - Post-electoral protests in Mozambique are threatening the country's thermal coal exports, leading to delays in shipment loadings and deliveries, market participants said Nov. 7.

Since the conclusion of the Mozambican presidential elections toward the end of October, which saw Daniel Chapo emerge as the winner, political unrest has ensued throughout the country. Opposition supporters have rallied against the election outcome, leading to clashes between the state authorities and the protesters.

Mozambique's quarterly thermal coal exports have been steady around the 2-million-mt mark for most part of 2024. The country's thermal coal exports were unchanged on the quarter at 1.8 million mt in the third quarter, S&P Global Commodities at Sea data showed. The outflows declined from 3 million mt in the year-ago quarter.

India and its Southeast Asian neighbors account for nearly 90% of the total thermal coal exports from Mozambique. The region cumulatively imported 1.4 million mt in the third quarter compared with 1.7 million in the second quarter and 1.6 million mt in the first quarter, according to CAS.

"The protests in Mozambique have increased significantly in the past 24 hours, resulting in rail operations suspension by the Caminhos de Ferro de Moçambique Sul (CFM) until further notice," freight and logistics group Grindrod, operator of the Terminal de Carvão da Matola, said Nov. 6 in a notice to its customers seen by S&P Global Commodity Insights.

The borders between Mozambique and South Africa have been closed due to the political turmoil in Mozambique, according to media reports.

Market participants said Mozambique's border authorities have ceased receiving cargoes at the Port of Maputo, and port authorities have temporarily suspended operations due to protesters blocking road access. The situation could result in delays or cancellations of coal shipment loadings and departures from the port.

"Due to the escalated situation in Mozambique, customs have received requests from drivers to [return] to the port." said a coal supplier dealing in South African thermal coal with an India-based trader. "Unfortunately, this compromises our process as they have [already] crossed the border, [posing a management] risk for us."

Some market participants estimated that 80,000 mt of weekly exports could be impacted from Maputo, Mozambique, if the protests continue.

There have been no reports of Nacala terminal operations getting impacted so far. However, market participants anticipate that if the protests persist, operations at the Nacala terminal may also come under pressure.

"I have not heard of any issues as yet with railings to Nacala, but they might be impacted as well," said a UAE-based trader dealing in South African thermal coal.

Market participants are concerned that the protests could lead South African thermal coal prices to rise due to supply shortages because of increased demand.

"With the main port at Maputo closed due to riots, cargo entry and loading of shipments have been restricted," a South Africa-based trader said. "This disruption could likely lead to increased prices and potential shortages in the South African thermal coal market."

Platts, part of Commodity Insights, assessed FOB Richards Bay 5,500 kcal/kg NAR coal prices down $1.50/mt at $87.50/mt in the week to Oct. 31. However, prices have risen 75 cents/mt since and were assessed at $88.25/mt on Nov. 6, stable on the day.

Some participants hope that weaker demand from Southeast Asia and a planned Nov. 7 march called by the opposition leader in Mozambique may lead to a de-escalation in the situation and resumption of port operations.

"I understand there is a big march planned today (Nov. 7) in Maputo, which could go either way," an India-based buyer dealing in South African and Mozambican thermal coal said. "Either it will help them find an amicable solution and bring the protest to an end, or it could add to the escalation. So let us hope it goes in a positive direction."

Terminal de Carvão da Matola has indicated that operations remain safe and aligned with the terminal's business continuity plan. However, they may revise this plan based on the latest developments.