Fri Aug 5, 2011
JOHANNESBURG (Reuters) - A South African judge on Friday ordered state utility Eskom to release details of an undisclosed pricing deal with mining giant BHP Billiton, which could prove embarrassing to both parties.
A local publishing group had requested the information, saying it showed a cosy relationship kept secret from the public in which Eskom provided electricity at cut-rate prices.
Judge Frans Kgomo said the release was in the public interest, radio broadcaster Eyewitness News reported.
Eskom spokeswoman Hilary Joffe said the company would not appeal the ruling.
BHP could not immediately comment.
Showing posts with label Eskom Holdings. Show all posts
Showing posts with label Eskom Holdings. Show all posts
Friday, August 5, 2011
Monday, July 25, 2011
South Africa coal miners start strike
Mon Jul 25, 2011
* Eskom sees no immediate impact from coal strike
* Above inflation wage deals hurting economy, analysts
By Agnieszka Flak and Olivia Kumwenda
JOHANNESBURG, July 25 - Tens of thousands of South African coal workers went on strike on Monday seeking inflation-busting 14 percent wage increases, but power utility Eskom said the
stoppage would not have an immediate impact on plants providing electricity to Africa's largest economy.
Hundreds of thousands of workers across the country have downed tools in recent weeks, or are threatening to do so, seeking raises double or triple the 5 percent inflation rate in the mid-year bargaining session known locally as "strike season".
State-run Eskom , which relies on coal for most of its power generation, said the latest strike would only have an impact if it became protracted.
"We've got on average 38 days of coal stockpiles at the power stations," spokesman Tony Stott said.
Lesiba Seshoka, spokesman for the powerful National Union of Mineworkers (NUM), said about 150,000 were on strike and employers have offered pay rises of 7 to 8.5 percent.
The chamber of mines said there are about 30,000 unionised workers in the coal sector and it was unclear how many were striking.
Employers over the past two years have struck wage deals averaging about 8 percent with many firms seeing the above-inflation settlements as a necessary cost of doing business in South Africa. They have also slashed jobs over the period to make up for the higher personnel costs.
Independent coal analyst Xavier Prevost said: "If there is no compromise and they continue like this, it's going to be serious and the damage to the economy will be big."
"If we don't produce coal, the first to be affected will be exports. Our (export) stockpiles will probably not last longer than 15 days".
The Richards Bay Coal Terminal, which ships most of South Africa's coal abroad, said stocks stood at a healthy 2.99 million tonnes at the end of June.
Eskom has been under pressure to build new plants to avoid a repeat of the power shortage that brought the economy to its knees in 2008, forcing mines to shut down for days and costing
the country billions of dollars in lost output.
It plans steep increases in electricity prices to pay for much-needed new power stations, adding to inflationary pressures and taking more money out of middle-class paychecks.
But Eskom is facing political pressure to settle with workers. The country's ruling African National Congress is allied with organised labour and wants to placate its millions of voters.
The Chamber of Mines is negotiating on behalf of several coal mining groups, including Anglo Thermal Coal SA , Exxaro , Optimum Coal and Xstrata Coal.
Read more
Why Coal Prices Will Soar in the Coming Years
Lontoh Coal Limited of South Africa has planned to open up China’s market
Coal prices area at US$ 120 a tonne
Mozambi Coal to acquire Mozambican coal concession
Newcastle steam coal price rises by 1pct
S.Africa's June coal exports rise to 4.78 mln T
Coal of Africa shares up almost 20%
* Eskom sees no immediate impact from coal strike
* Above inflation wage deals hurting economy, analysts
By Agnieszka Flak and Olivia Kumwenda
JOHANNESBURG, July 25 - Tens of thousands of South African coal workers went on strike on Monday seeking inflation-busting 14 percent wage increases, but power utility Eskom said the
stoppage would not have an immediate impact on plants providing electricity to Africa's largest economy.
Hundreds of thousands of workers across the country have downed tools in recent weeks, or are threatening to do so, seeking raises double or triple the 5 percent inflation rate in the mid-year bargaining session known locally as "strike season".
State-run Eskom , which relies on coal for most of its power generation, said the latest strike would only have an impact if it became protracted.
"We've got on average 38 days of coal stockpiles at the power stations," spokesman Tony Stott said.
Lesiba Seshoka, spokesman for the powerful National Union of Mineworkers (NUM), said about 150,000 were on strike and employers have offered pay rises of 7 to 8.5 percent.
The chamber of mines said there are about 30,000 unionised workers in the coal sector and it was unclear how many were striking.
Employers over the past two years have struck wage deals averaging about 8 percent with many firms seeing the above-inflation settlements as a necessary cost of doing business in South Africa. They have also slashed jobs over the period to make up for the higher personnel costs.
Independent coal analyst Xavier Prevost said: "If there is no compromise and they continue like this, it's going to be serious and the damage to the economy will be big."
"If we don't produce coal, the first to be affected will be exports. Our (export) stockpiles will probably not last longer than 15 days".
The Richards Bay Coal Terminal, which ships most of South Africa's coal abroad, said stocks stood at a healthy 2.99 million tonnes at the end of June.
Eskom has been under pressure to build new plants to avoid a repeat of the power shortage that brought the economy to its knees in 2008, forcing mines to shut down for days and costing
the country billions of dollars in lost output.
It plans steep increases in electricity prices to pay for much-needed new power stations, adding to inflationary pressures and taking more money out of middle-class paychecks.
But Eskom is facing political pressure to settle with workers. The country's ruling African National Congress is allied with organised labour and wants to placate its millions of voters.
The Chamber of Mines is negotiating on behalf of several coal mining groups, including Anglo Thermal Coal SA , Exxaro , Optimum Coal and Xstrata Coal.
Read more
Why Coal Prices Will Soar in the Coming Years
Lontoh Coal Limited of South Africa has planned to open up China’s market
Coal prices area at US$ 120 a tonne
Mozambi Coal to acquire Mozambican coal concession
Newcastle steam coal price rises by 1pct
S.Africa's June coal exports rise to 4.78 mln T
Coal of Africa shares up almost 20%
Friday, February 4, 2011
Analysis: Eskom pushing for coal price controls, mining regulation
February04, 2011, 12:38:32
South Africa; The adage “taking coals to Newcastle” connotes an exercise in futility – if not downright stupidity. Apparent steps by Eskom and the government to control and regulate the coal mining industry in South Africa exemplify what the adage is about. By CHRIS YELLAND.
In recent months and at various venues Eskom has been punting the view that a new dispensation and enabling environment is required for the utility to secure the cheap and abundant supplies of coal needed for its current and future net of coal-fired power stations.
When pressed for details, Eskom officials become a little coy. But stripping away the euphemisms, what Eskom is saying is that, in the light of higher global demand and world market prices for even the low-grade coal used in Eskom power stations, the utility is having difficulty matching these prices and contracting on a voluntary basis with the coal miners to secure medium and long-term coal supplies.
Eskom is, therefore, seeking heavy-handed new mechanisms to ensure its own coal needs are met, and is suggesting policy options such as price controls, licensing, export quotas and restrictions on the export of the grade of coal it uses, and increased powers for the minister to intervene in the interests of domestic energy security.
In short, instead of pricing based on supply and demand and voluntary long-term contract prices, Eskom is pushing for government-regulated pricing that provides a “fair return for the capital and skills that they [the coal miners] contribute, linked to the cost of capital and the risk that they assume” – a kind of “cost plus” methodology.
Eskom’s suggestions for domestic coal price controls and the regulation of the coal mining industry are based on the premise that abundant, cheap coal for the generation of electricity in South Africa is good for Eskom, for commerce and industry, for the economy and the country and ultimately for the consumer.
Eskom claims increases in the cost of coal will lead to an increased price of electricity, which has a negative impact on GDP and economic growth and, therefore, a negative impact on employment.
Of course, this is simplistic nonsense, as the following two examples illustrate.
Firstly, in the late 1980s, 1990s and early 2000s, when Eskom’s price of electricity was by far the lowest in the world, South Africa’s economic growth rate was low and its rate of unemployment was very high.
Secondly, the artificially low Eskom electricity price enjoyed by BHP Billiton’s Hillside, Bayside and Mozal aluminium smelters in recent years, which was significantly below the cost of electricity production, did not enhance the country’s economic growth or reduce the high rate of unemployment in South Africa.
On the contrary, in response to secret, low electricity price deals with Eskom, BHP Billiton imported bauxite to South Africa by ship, and exported cheap South African electricity around the world in the form of aluminium ingots. The fact that this was done at a time of electricity shortages and load-shedding in South Africa inhibited economic growth and caused job losses.
Don’t blame BHP Billiton though. Blame those whose economic policy it was to drive energy-intensive economic growth by selling a precious and highly-valued energy resource at artificially low prices, while not understanding the long-term consequences.
The reality is that interference with voluntary contracting between users and producers, and with well-established market pricing mechanisms, leads to market distortions with serious unintended consequences. There is indeed adequate competition in the coal mining and supply sector, and even Eskom acknowledges there is a vibrant and diverse coal mining industry in South Africa. A sound basis for coal price regulation, namely to prevent monopoly abuse and price collusion by coal producers, does not exist.
In the current environment, one would argue that price controls with artificially low coal prices are bad for Eskom, industry, the economy and the country. Coal as the primary energy source represents the low-cost, high-CO2 emission, business-as-usual scenario that has led to low economic growth and generation capacity shortages.
Artificially low, regulated coal prices to Eskom will maintain our dependence on a non-renewable, carbon-based energy source, entrench uncompetitive, energy-guzzling smoke-stack industries, encourage high energy-intensity industries when South Africa should be moving towards lower energy-intensity economic activities, discourage energy efficiency, inhibit private investment in power generation when Eskom and the government are cash strapped and establish a time when an inevitable return to real prices will come as a deep shock to the productive economy and the consumer.
In addition, artificially low, regulated coal prices to Eskom will prejudice the emergence of independent power producers, regional power initiatives and cleaner, alternative energy sources, including hydro, nuclear, bio-waste, industrial co-generation, wind and solar, and will perpetuate the uneven playing fields that the coal-dominated monopoly has enjoyed up to now.
Eskom and South Africa’s continued dependency on coal is like an addictive drug that holds us down and will come back to haunt us. I suggest government and Eskom allow coal prices to rise (or fall) to their true values based on supply and demand and voluntary contracts between the buyer and sellers. Rising coal prices will provide just the signals needed to encourage the move to alternative, cleaner energy sources. Government still has the option to impose royalties, levies and taxes on the coal mining companies, and it should use this option in preference to price controls.
The treasury has recently issued a carbon tax discussion paper for comment and response by 28 February. Deloitte has estimated the proposed carbon tax would cost Eskom some R37 billion a year based on a tax rate of R165/ton of CO2 emitted, which is also in line with the tax rate used in the draft integrated resource plan for electricity of 2010. This additional cost would be passed through to Eskom’s customers in the form of increased electricity prices.
It would appear quite illogical and contradictory to effectively subsidise the price of electricity by providing Eskom with artificially low, non-market related coal prices, and then impose a carbon tax on its coal consumption. On the one hand coal price controls would be encouraging coal usage by Eskom, while on the other hand the carbon tax would be discouraging such usage. Economic policies need to be clear, sound and non-contradictory.
The world is moving to reduce tax carbon emissions on the basis that users should pay the full price of burning coal, including the cost of externalities. Regulating the coal price to maintain artificially low coal prices for Eskom is counterproductive, and effectively subsidises and encourages its continued coal usage while prejudicing cleaner energy options – the very opposite of the direction we should be taking
(sourced:The Daily Maverick)
If you believe an article violates your rights or the rights of others, please contact us.
South Africa; The adage “taking coals to Newcastle” connotes an exercise in futility – if not downright stupidity. Apparent steps by Eskom and the government to control and regulate the coal mining industry in South Africa exemplify what the adage is about. By CHRIS YELLAND.
In recent months and at various venues Eskom has been punting the view that a new dispensation and enabling environment is required for the utility to secure the cheap and abundant supplies of coal needed for its current and future net of coal-fired power stations.
When pressed for details, Eskom officials become a little coy. But stripping away the euphemisms, what Eskom is saying is that, in the light of higher global demand and world market prices for even the low-grade coal used in Eskom power stations, the utility is having difficulty matching these prices and contracting on a voluntary basis with the coal miners to secure medium and long-term coal supplies.
Eskom is, therefore, seeking heavy-handed new mechanisms to ensure its own coal needs are met, and is suggesting policy options such as price controls, licensing, export quotas and restrictions on the export of the grade of coal it uses, and increased powers for the minister to intervene in the interests of domestic energy security.
In short, instead of pricing based on supply and demand and voluntary long-term contract prices, Eskom is pushing for government-regulated pricing that provides a “fair return for the capital and skills that they [the coal miners] contribute, linked to the cost of capital and the risk that they assume” – a kind of “cost plus” methodology.
Eskom’s suggestions for domestic coal price controls and the regulation of the coal mining industry are based on the premise that abundant, cheap coal for the generation of electricity in South Africa is good for Eskom, for commerce and industry, for the economy and the country and ultimately for the consumer.
Eskom claims increases in the cost of coal will lead to an increased price of electricity, which has a negative impact on GDP and economic growth and, therefore, a negative impact on employment.
Of course, this is simplistic nonsense, as the following two examples illustrate.
Firstly, in the late 1980s, 1990s and early 2000s, when Eskom’s price of electricity was by far the lowest in the world, South Africa’s economic growth rate was low and its rate of unemployment was very high.
Secondly, the artificially low Eskom electricity price enjoyed by BHP Billiton’s Hillside, Bayside and Mozal aluminium smelters in recent years, which was significantly below the cost of electricity production, did not enhance the country’s economic growth or reduce the high rate of unemployment in South Africa.
On the contrary, in response to secret, low electricity price deals with Eskom, BHP Billiton imported bauxite to South Africa by ship, and exported cheap South African electricity around the world in the form of aluminium ingots. The fact that this was done at a time of electricity shortages and load-shedding in South Africa inhibited economic growth and caused job losses.
Don’t blame BHP Billiton though. Blame those whose economic policy it was to drive energy-intensive economic growth by selling a precious and highly-valued energy resource at artificially low prices, while not understanding the long-term consequences.
The reality is that interference with voluntary contracting between users and producers, and with well-established market pricing mechanisms, leads to market distortions with serious unintended consequences. There is indeed adequate competition in the coal mining and supply sector, and even Eskom acknowledges there is a vibrant and diverse coal mining industry in South Africa. A sound basis for coal price regulation, namely to prevent monopoly abuse and price collusion by coal producers, does not exist.
In the current environment, one would argue that price controls with artificially low coal prices are bad for Eskom, industry, the economy and the country. Coal as the primary energy source represents the low-cost, high-CO2 emission, business-as-usual scenario that has led to low economic growth and generation capacity shortages.
Artificially low, regulated coal prices to Eskom will maintain our dependence on a non-renewable, carbon-based energy source, entrench uncompetitive, energy-guzzling smoke-stack industries, encourage high energy-intensity industries when South Africa should be moving towards lower energy-intensity economic activities, discourage energy efficiency, inhibit private investment in power generation when Eskom and the government are cash strapped and establish a time when an inevitable return to real prices will come as a deep shock to the productive economy and the consumer.
In addition, artificially low, regulated coal prices to Eskom will prejudice the emergence of independent power producers, regional power initiatives and cleaner, alternative energy sources, including hydro, nuclear, bio-waste, industrial co-generation, wind and solar, and will perpetuate the uneven playing fields that the coal-dominated monopoly has enjoyed up to now.
Eskom and South Africa’s continued dependency on coal is like an addictive drug that holds us down and will come back to haunt us. I suggest government and Eskom allow coal prices to rise (or fall) to their true values based on supply and demand and voluntary contracts between the buyer and sellers. Rising coal prices will provide just the signals needed to encourage the move to alternative, cleaner energy sources. Government still has the option to impose royalties, levies and taxes on the coal mining companies, and it should use this option in preference to price controls.
The treasury has recently issued a carbon tax discussion paper for comment and response by 28 February. Deloitte has estimated the proposed carbon tax would cost Eskom some R37 billion a year based on a tax rate of R165/ton of CO2 emitted, which is also in line with the tax rate used in the draft integrated resource plan for electricity of 2010. This additional cost would be passed through to Eskom’s customers in the form of increased electricity prices.
It would appear quite illogical and contradictory to effectively subsidise the price of electricity by providing Eskom with artificially low, non-market related coal prices, and then impose a carbon tax on its coal consumption. On the one hand coal price controls would be encouraging coal usage by Eskom, while on the other hand the carbon tax would be discouraging such usage. Economic policies need to be clear, sound and non-contradictory.
The world is moving to reduce tax carbon emissions on the basis that users should pay the full price of burning coal, including the cost of externalities. Regulating the coal price to maintain artificially low coal prices for Eskom is counterproductive, and effectively subsidises and encourages its continued coal usage while prejudicing cleaner energy options – the very opposite of the direction we should be taking
(sourced:The Daily Maverick)
If you believe an article violates your rights or the rights of others, please contact us.
Wednesday, February 2, 2011
BHP, Anglo Coal Supply Deals to Be Revised, Eskom Says
Wednesday,February 02, 2011
By Carli Lourens
Feb. 2 (Bloomberg) -- Eskom Holdings Ltd., producer of 95 percent of South African power, plans to revise deals with coal mine operators including BHP Billiton Ltd. and Anglo American Plc to secure supplies amid a surge in competing Indian demand.
Eskom has begun talks to spur suppliers to accept prices at “efficient cost, plus fair returns,” Chief Commercial Officer Dan Marokane said in an interview from Cape Town. “About 525 million tons could be at risk from competition with exports,” threatening to make electricity charges unaffordable, he said.
State-run Eskom delivers power to Xstrata Plc’s ferrochrome furnaces, AngloGold Ashanti Ltd.’s gold mines and BHP’s aluminum smelters in South Africa. The utility, one of the 10 largest in the world by capacity, has struggled to fund a 485 billion rand ($68 billion) expansion program to prevent a repetition of the power blackouts that hit mines, factories and cities in 2008.
Eskom, based in Johannesburg, will seek to persuade coal suppliers to accept new terms by reducing the risk of rising production costs for the mine operators, Marokane said today.
Export quotas, restrictions on low-grade coal shipments abroad from Richards Bay and “increased powers for the minister to intervene in the interests of domestic energy security” may also be used to secure domestic power needs, Marokane said.
Xstrata declined to comment on Eskom’s discussions, while Anglo, BHP and Exxaro Resources Ltd., another supplier, didn’t immediately respond to e-mails from Bloomberg seeking reaction.
Competing With India
India competes for South African coal as the Asian country needs a low-grade fuel similar to that used in Eskom’s power plants, more than 80 percent of which are coal-fired. European electricity producers typically only buy higher coal grades.
Asia overtook Europe as the largest foreign buyer of South African coal in the last two years as India boosted purchases.
Richards Bay terminal, which ships almost all of South Africa’s coal for export, sent 59 percent of total shipments to Asia last year and 25 percent to Europe. India is looking to expand electricity generation capacity by 20 percent to 200,000 megawatts from current levels by March 2012.
“Unless a new approach is found, Eskom will find itself paying globally linked coal costs,” Marokane said, adding that a commensurate increase in electricity prices would “counter the aspirations of a growing economy.” Prices of coal shipped through Richards Bay rose about 60 percent last year to $129.75 a metric ton, according to IHS McCloskey data on Bloomberg.
Unaffordable
Eskom is already hiking charges by several-times inflation, on average by 25 percent a year for the three years from 2010, after long keeping prices subdued to stimulate development.
The company, which burnt 123 million tons of coal last fiscal year, has about 95 percent of supplies contracted or committed until 2018. Two new power plants, Medupi and Kusile, will begin generating power in the next few years, adding more than 30 million tons to Eskom’s annual requirement.
The utility is also concerned coal companies will focus on building mines in other countries and the government should make it “more attractive” for companies to dig new mines, Marokane said. Eskom estimates the industry needs to spend 175 billion rand between 2009 and 2020 digging mines to meet rising needs.
South Africa needs a national energy coal development plan, Marokane said. The country mined about 250 million tons of coal in 2009, or 4.1 percent of world output, making it the seventh- largest producer, according to an Oct. 1 report by UBS AG.
(Editors:Tony Barrett,Dan Weeks, sourced bloomberg)
By Carli Lourens
Feb. 2 (Bloomberg) -- Eskom Holdings Ltd., producer of 95 percent of South African power, plans to revise deals with coal mine operators including BHP Billiton Ltd. and Anglo American Plc to secure supplies amid a surge in competing Indian demand.
Eskom has begun talks to spur suppliers to accept prices at “efficient cost, plus fair returns,” Chief Commercial Officer Dan Marokane said in an interview from Cape Town. “About 525 million tons could be at risk from competition with exports,” threatening to make electricity charges unaffordable, he said.
State-run Eskom delivers power to Xstrata Plc’s ferrochrome furnaces, AngloGold Ashanti Ltd.’s gold mines and BHP’s aluminum smelters in South Africa. The utility, one of the 10 largest in the world by capacity, has struggled to fund a 485 billion rand ($68 billion) expansion program to prevent a repetition of the power blackouts that hit mines, factories and cities in 2008.
Eskom, based in Johannesburg, will seek to persuade coal suppliers to accept new terms by reducing the risk of rising production costs for the mine operators, Marokane said today.
Export quotas, restrictions on low-grade coal shipments abroad from Richards Bay and “increased powers for the minister to intervene in the interests of domestic energy security” may also be used to secure domestic power needs, Marokane said.
Xstrata declined to comment on Eskom’s discussions, while Anglo, BHP and Exxaro Resources Ltd., another supplier, didn’t immediately respond to e-mails from Bloomberg seeking reaction.
Competing With India
India competes for South African coal as the Asian country needs a low-grade fuel similar to that used in Eskom’s power plants, more than 80 percent of which are coal-fired. European electricity producers typically only buy higher coal grades.
Asia overtook Europe as the largest foreign buyer of South African coal in the last two years as India boosted purchases.
Richards Bay terminal, which ships almost all of South Africa’s coal for export, sent 59 percent of total shipments to Asia last year and 25 percent to Europe. India is looking to expand electricity generation capacity by 20 percent to 200,000 megawatts from current levels by March 2012.
“Unless a new approach is found, Eskom will find itself paying globally linked coal costs,” Marokane said, adding that a commensurate increase in electricity prices would “counter the aspirations of a growing economy.” Prices of coal shipped through Richards Bay rose about 60 percent last year to $129.75 a metric ton, according to IHS McCloskey data on Bloomberg.
Unaffordable
Eskom is already hiking charges by several-times inflation, on average by 25 percent a year for the three years from 2010, after long keeping prices subdued to stimulate development.
The company, which burnt 123 million tons of coal last fiscal year, has about 95 percent of supplies contracted or committed until 2018. Two new power plants, Medupi and Kusile, will begin generating power in the next few years, adding more than 30 million tons to Eskom’s annual requirement.
The utility is also concerned coal companies will focus on building mines in other countries and the government should make it “more attractive” for companies to dig new mines, Marokane said. Eskom estimates the industry needs to spend 175 billion rand between 2009 and 2020 digging mines to meet rising needs.
South Africa needs a national energy coal development plan, Marokane said. The country mined about 250 million tons of coal in 2009, or 4.1 percent of world output, making it the seventh- largest producer, according to an Oct. 1 report by UBS AG.
(Editors:Tony Barrett,Dan Weeks, sourced bloomberg)
South Africa Wants State to Play Role in Coal Mining
February 02, 2011, 7:40 AM EST
By Mike Cohen
Bloomberg-South Africa’s government wants a state-owned mining company to have coal interests to help ensure power utility Eskom Holdings Ltd. can secure supplies of the fuel, Mineral Resources Minister Susan Shabangu said.
“Coal is a strategic asset,” Shabangu told the McCloskey South African Coal Exports Conference in Cape Town today. “We need to grow our economy, we need energy in general. It becomes important for the state to play a role there. We are looking at 18 months” to clarify the role the mining company would play.
Eskom, which generates 95 percent of power in Africa’s largest economy, has called on the government to develop a coal export policy that will guarantee it sufficient, affordable supplies as exports become more lucrative for producers. BHP Billiton Ltd., Xstrata Plc and Anglo American Plc are among the biggest coal producers in South Africa, which generates about 93 percent of its electricity from the fuel.
“It is not the government’s intention to enter the minefield of specifying all the processes and it is our fervent hope that the industry will recognize the particular challenge and work with us,” Shabangu said. “We reserve the right to take corrective measures should the situation demand it. A balance has to be found between pursuing the principles of free market while taking into account the needs of the country.”
Eskom burned 123 million metric tons of coal in its last fiscal year. Recent floods in Australia have bolstered demand for South African coal, and pushed up international coal prices.
‘Australian Misfortunes’
“Some will see an opportunity of making more money on the back of the Australian misfortunes,” Shabangu said. “That opportunity may very well be a serious threat to our supplies for electricity generation. We will be monitoring the situation closely because we will not allow a situation” that will harm the economy.
Shabangu welcomed a Jan. 31 call by BHP Billiton’s South African energy coal unit for bids to buy prospecting rights over its undeveloped reserves, saying it would help bring new investors into the industry.
South Africa is the world’s seventh biggest coal producer and the fifth biggest exporter of the fuel, government data shows. In 2009, the country produced 249 million tons of thermal coal, 74 percent of which was consumed locally, and had about 30 billion tons of reserves.
--Editors: John Deane, Alastair Reed
By Mike Cohen
Bloomberg-South Africa’s government wants a state-owned mining company to have coal interests to help ensure power utility Eskom Holdings Ltd. can secure supplies of the fuel, Mineral Resources Minister Susan Shabangu said.
“Coal is a strategic asset,” Shabangu told the McCloskey South African Coal Exports Conference in Cape Town today. “We need to grow our economy, we need energy in general. It becomes important for the state to play a role there. We are looking at 18 months” to clarify the role the mining company would play.
Eskom, which generates 95 percent of power in Africa’s largest economy, has called on the government to develop a coal export policy that will guarantee it sufficient, affordable supplies as exports become more lucrative for producers. BHP Billiton Ltd., Xstrata Plc and Anglo American Plc are among the biggest coal producers in South Africa, which generates about 93 percent of its electricity from the fuel.
“It is not the government’s intention to enter the minefield of specifying all the processes and it is our fervent hope that the industry will recognize the particular challenge and work with us,” Shabangu said. “We reserve the right to take corrective measures should the situation demand it. A balance has to be found between pursuing the principles of free market while taking into account the needs of the country.”
Eskom burned 123 million metric tons of coal in its last fiscal year. Recent floods in Australia have bolstered demand for South African coal, and pushed up international coal prices.
‘Australian Misfortunes’
“Some will see an opportunity of making more money on the back of the Australian misfortunes,” Shabangu said. “That opportunity may very well be a serious threat to our supplies for electricity generation. We will be monitoring the situation closely because we will not allow a situation” that will harm the economy.
Shabangu welcomed a Jan. 31 call by BHP Billiton’s South African energy coal unit for bids to buy prospecting rights over its undeveloped reserves, saying it would help bring new investors into the industry.
South Africa is the world’s seventh biggest coal producer and the fifth biggest exporter of the fuel, government data shows. In 2009, the country produced 249 million tons of thermal coal, 74 percent of which was consumed locally, and had about 30 billion tons of reserves.
--Editors: John Deane, Alastair Reed
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