Turkish Firm Supplies Ethiopia with Coal

A Turkish company is importing steam coal to supply cement factories for an estimated 60 million dollars.

HC Trading Plc, a company founded in 1996 to conduct the trading activities of Heidelberg Cement Group companies worldwide, has so far delivered 200,000tn of coal, shipping 50,000tn a month since the beginning of this year.

Contracted by the Ethiopian Petroleum Supply Enterprise (EPSE), the company was awarded to supply 650,000tn of the 850,000tn of coal that will be consumed by cement factories in 2019.

HC Trading won the right to supply the coal after vying with Riftcot, a company based in Kenya and known for supplying coal, bitumen electricity generation and off-grid lighting items in East Africa. Last year, Riftcot and HC Trading supplied 100,000tn and 600,000tn of coal, respectively.

HC Trading secured the latest deal by offering the lowest profit margin or the "least premium" above the price of coal on the global market.

As of May 10, 2019, the price of June futures contract for a tonne of thermal coal loaded at Richards Bay in South Africa was 73 dollars, according to the Intercontinental Exchange, one of the world's largest commodity exchanges.

Before the Enterprise announced the tender, it tabulated the expected demand from the cement factories between to be 650,000tn - 850,000tn, according to Abayneh Awol, manager of the petroleum supply & sales department at the Enterprise.

"The company will supply the coal between these figures depending on the demand of the companies," Abayneh told Fortune.

Cement manufacturers and steel and metal companies heavily depend on carbon-intensive fuels such as coal. To meet the demand of these companies, the Enterprise has been procuring coal and selling it to them since 2013.

The 20 operational cement factories, which have a production capacity of 18 million tonnes of cement a year, require 3,900tn of coal a day to operate in their full capacity.

Habesha Cement, which was inaugurated in 2017 and has a capacity of producing 1.4 million tonnes of cement a year, is one of the beneficiaries. It has a daily demand of 390tn of coal.

The company is procuring the coal from the Enterprise, since the local supply could not meet its demand, according to Mesfin Abi, chief executive officer of Habesha Cement.