The effect of coal price volatility on the performance of South African coal mining firms

Abstract

This study examines the impact of coal price volatility on the performance of South African coal mining firms, focussing on interdependence and spillover effects within the industry. Utilizing quantitative models and econometric methodologies, the research reveals substantial directional spillover effects among South African coal firms, highlighting their interconnectedness. Through pair-wise directional spillover connectivity and rolling window analyses, significant patterns in coal price volatility and its impact on firm performance are identified. These findings offer valuable insights for enhancing risk management techniques, guiding investment decisions, and shaping policy actions to support resilience and sustainability in the South African coal industry. Furthermore, this research deepens the understanding of coal market dynamics, providing practical suggestions for industry stakeholders to address challenges from coal price volatility and improve their competitive position in the global energy sector. By addressing the unique dynamics of interconnections among South African coal enterprises, this study fills a gap in the existing literature, as these interdependence and spillover effects have not been extensively explored in previous research. It advances the understanding in the field by detailing the transmission mechanisms and interdependencies within the region, contributing to the broader knowledge on spillover effects in commodity markets, and offering crucial implications for stakeholders.