Coal remained South Africa’s most significant mining commodity by production volume in 2025, with output reaching approximately 236 Mt. Despite intensifying global pressure to transition away from fossil fuels, the sector continues to underpin both the country’s energy security and industrial base. Bituminous coal dominated production, accounting for 99% of total output, while anthracite made up the remaining 1%. Although relatively small in volume, anthracite production, introduced only in 2013, has carved out a strategic niche as a high-quality input for smelters, alloy manufacturing and steel production.

Domestic demand anchors production

The defining feature of South Africa’s coal sector remains its heavy reliance on domestic consumption. In 2025, demand was overwhelmingly driven by electricity generation, reinforcing coal’s central role in the national energy mix. State utility Eskom remained the single largest consumer, using approximately 108 Mt of coal during the 2024/25 financial year to supply its fleet of coal-fired power stations. Petrochemicals group Sasol consumed a further 30 to 40 Mt.

Together, these two entities accounted for nearly two-thirds of total coal demand, effectively acting as the primary pull factor behind production. This concentration underscores the structural dependence of the coal industry on a limited number of domestic buyers, even as export markets remain important.

Export markets steady but constrained

Roughly one-third of South Africa’s coal production was exported in 2025, with annualised data indicating volumes of around 72 Mt. The bulk of these exports, approximately 94%, were channelled through the Richards Bay Coal Terminal and the adjacent Port of Richards Bay, while the remaining 6% moved via land borders into neighbouring markets. Asia continued to dominate as the primary export destination, accounting for approximately 80% of shipments. India emerged as the single largest importer, purchasing roughly 46% of South African coal exports.

Europe represented about 10% of export volumes, up slightly from the previous year, while African markets accounted for the remaining 10%, with demand spread across Northern, Eastern and Western regions. However, export performance remains structurally constrained. Despite incremental improvements by Transnet, rail capacity along the coal corridor continues to limit throughput. RBCT, with an installed capacity of 91 Mtpa, is currently operating at barely half its potential, with export flows tracking at an annualised rate of 56.8 Mt in 2025.

Prices weigh on sector performance

While production remained broadly flat, declining marginally by 0.2% year-on-year, revenue performance was more significantly impacted by falling prices. Total coal sales are expected to decline by approximately 2.6% in 2025, largely due to a sharp 14.9% drop in prices. Export coal prices fell to around US$90 p/t in 2025, down from US$106/t in 2024 and US$122.4/t in 2023. Price volatility was most pronounced in international markets, while domestic pricing remained relatively stable, providing a degree of insulation for producers supplying Eskom and Sasol.

Toward the end of the year, prices showed signs of recovery. In December 2025, Richards Bay benchmark prices averaged US$89.2/t, rebounding from the US$82–85/t range seen in October and November. This uptick was driven by seasonal winter demand in Europe, stockpile replenishment and renewed buying activity across Asia. Nevertheless, broader demand conditions remained subdued, reflecting weaker global economic growth and persistent trade uncertainty.

Infrastructure and security challenges persist

Operationally, the coal industry continues to grapple with infrastructure bottlenecks and security risks along the export corridor. The 600 km rail line linking inland coalfields to Richards Bay remains vulnerable to cable theft, vandalism and broader criminal activity. Encouragingly, collaboration between mining companies and Transnet has begun to yield tangible improvements. Enhanced security measures have significantly reduced incidents of theft and disruption, improving reliability and safeguarding export volumes. However, these interventions come at an additional cost to producers already navigating tighter margins.

Policy shifts reshape long-term outlook

Looking ahead, the most significant structural challenge facing the coal sector is domestic policy direction. South Africa’s Integrated Resource Plan (IRP) 2025, released in November, outlines a steep decline in coal’s role in electricity generation over the coming decades. Under the plan, coal’s share of Eskom’s installed capacity is projected to fall from 59% today to just 11% by 2042. In volume terms, this implies a reduction of approximately 62 Mt in annual coal consumption, lowering Eskom’s demand to around 40 Mtpa. Unless carbon capture technologies or other emissions-reduction solutions are deployed at scale, this trajectory points to a structurally smaller domestic coal market over time.

Near-term sentiment improves

Despite these long-term headwinds, sentiment toward coal has shown signs of improvement in the near to medium term. Two factors are driving this shift. First, evolving global policy dynamics, particularly in the United States, are beginning to reopen funding channels for fossil fuel projects, with pressure mounting on multilateral institutions to support energy security alongside decarbonisation. Second, there is growing recognition that coal will remain essential for baseload power generation, particularly as electricity demand accelerates globally. The rise of energy-intensive technologies, including artificial intelligence, is placing additional strain on power systems, while grid constraints continue to limit the pace at which renewables can be integrated.

Balancing resilience and transition

In this context, South Africa’s coal sector finds itself at a critical juncture. In the short term, it remains indispensable, anchoring energy supply, supporting industrial activity and generating export revenue. Yet over the longer term, structural decline appears inevitable as policy, technology and capital flows shift. For producers, the strategic imperative will be to maximise value from existing operations while adapting to a gradually contracting domestic market and increasingly competitive export landscape.

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