London (Platts)--25Jan2008

A prolonged period of heavy rainfall in South Africa is beginning to cause
some disruption to open-cast coal mining operations, according to a number of
coal producers and traders.

The market's reaction to the production problems has been to increase physical
Richards Bay coal prices which are now commanding a premium of several dollars
over paper prices.

"It's causing a discrepancy between physical and paper prices," said a trader.
A 50,000 mt Richards Bay cargo for February delivery traded at $99.25/mt FOB
on Wednesday, while paper API4 prices have been trading around $95/mt FOB.

Anglo American spokesman Pranill Ramchander said in an e-mailed statement
Thursday: "We have had the most impact at our open-cast coal mines in the last
week. Yes, production to a certain extent has had an impact. We cannot
quantify this yet."

BHP spokeswoman Bronwyn Wilkinson said that 19 consecutive days of rainfall
had made production at some of its coal mines in Mpumalanga province, South
Africa "difficult."

But she stressed: "At this point, we are managing the situation effectively
with pumps and have not experienced flooding in the mines." The company has
installed pumps at some of its mines to drain excess water that has collected
in open-cast pits.

Exxaro spokesman Ernst Venter said the company's underground coal mines were
unaffected by the heavier than normal rainfall. In its open-cast mines it has
cut back on strip mining but was managing to maintain its run-of-mine coal
production levels. Exxaro produces around 43 million mt/year of coal.

Smaller coal producers are also encountering operational problems. A trader
said that wet and muddy road conditions were hampering smaller producers?
efforts to transfer coal by truck from wash plants to railway sidings.

"It's starting to affect many people," said a coal trader.

South African rail carrier Transnet said there has not yet been any
discernable effect on its coal railing operations into Richards Bay.

"Everything is normal, so far we have not experienced anything," said Sandile
Simelane, a spokesman for the South African freight carrier.

Coal stocks at Richards Bay Coal Terminal have risen to around 2 million mt
from around 1.1 million mt at the start of January, said a coal market source.
Stockpiles at the terminal are recovering slowly despite expectations that
Richards Bay will have a light shipping program during January, with as little
as 4 million mt being exported this month.