Wednesday - March 03, 2010

Pirates Go For Coal

Booming Asian demand for South African coal will put more ships at risk from Somali pirates operating in the Indian Ocean and raise insurance and freight costs already hiked due to seaborne attacks.

Emboldened by rising ransom payments, Somali pirates have stepped up attacks in recent months, making tens of millions of dollars by hijacking ships in the Indian Ocean and the Gulf of Aden.

While pirates have hijacked oil tankers, passenger ships and yachts, they have started to target slow moving coal bulk carriers, which are easier to overcome than a large tanker.

Asia, led by India and China, could take 75 percent of South Africa’s 65 million tonnes of thermal coal exports in 2010 as demand shifts from glutted Europe, putting many more ships in the gun sights of Somali pirates, analysts said.

That’s right folks, there’s a boom market going on in coal. Sure makes me proud we have a super-genius president who has promised to bankrupt the coal industry! China and India can’t get enough of it, and they will burn it any damn way they want. Kind of makes me wonder if all this green movement stuff, this “clean coal” is all just NIMBYism. Not In My BackYard. Please, do you have the slightest, smallest belief that any factory in India or China is going to have the scrubbers and the purifiers in the smokestacks like powerplants and factories in the USA do? And you know where that coal dust lands that gets burned in China? In Oregon and California.

So, I wonder if the US is getting a nice big piece of the sales for that asian coal boom. WTH, we could dig it up, send it by train over to the west coast, then ship it across the Pacific, and come nowhere near any of those Somali pirates. Think of the money that would save! Think of the jobs saved or created! Think of the profits to be made: right now, thermal coal is selling for $90/mt in China. $69.40/mt in South Africa. But only $63.75/mt for high energy low sulfur Appalachian ( 1mt = 1.1st). There is REAL MONEY to be made in this kind of carbon trading!

A senior shipper said piracy risk cover on a voyage from South Africa to India added $30,000 on top of the basic insurance cost. A further $40,000 to $50,000 had to be added for longer diversions aimed at avoiding pirates.

So the pirates are adding nearly $80 grand in costs per shipment. Thanks. And businessmen are starting to get fed up:

“It is a massive area and there are just not the warships to patrol it,” said Peter Hinchliffe, marine director with the International Chamber of Shipping (ICS), which represents 75 percent of the global shipping industry.

Hinchliffe said it was vital to ensure the “free and unhindered passage of world trade by sea”, urging the targeting of mother ships.

“We are seeing governments effectively not doing much more than putting a sticking plaster over the problem,” he said.

Others are just burning joss sticks and hoping their karma works out

Some of India’s biggest coal traders said they doubted much could be done to combat piracy.

“We haven’t been affected so far, perhaps we’ve just been lucky,” one major coal trader said.

Oh, about those US coal exports. South Africa is digging up 65 million metric tons of it, and selling 3/4 of that to the far east. I read somewhere the USA mined 1,150 million metric tons of it in 2008, and managed to export just more than 73 million metric tons.  Most of that was coking coal used for steel production, which sells for about $16/mt. Thermal coal, the stuff you’d fire the boilers with, goes for $70-100/mt usually. And to top it all off, WE IMPORT COAL. Huh???

Coal imports totaled nearly 31mt, down 2mt from 2008, but in line with expectations.

Posted by Drew458     on 03/03/2010 at 10:35 PM   
Filed Under: • Oil, Alternative Energy, and Gas Prices • Pirates, aarrgh! •  
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