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The McCloskey 2011 Coal Conference

World Coal,

Taking place shortly after the floods in Australian and the steam coal price boom in January, the 2011 conference was a great success. Many of the delegates, producers, users and traders attended to explore the possibility of buying or selling coal from South Africa. This proved, however, not to be an easy goal to reach, after discovering South Africa’s rail constraints. The keynote of the conference was given by retired company guru Gerard McCloskey.

Gerard devoted his paper to answering three main questions: the effect of the Australian floods on coal supply; whether other countries would be able to fill the supply gap; and the impact of these issues on coal prices. Although the paper focused mainly on coking and met coals, Gerard pointed out in his conclusion that in recent years, South African steam coal trade has been mainly with Asia, India being the largest importer. This was further explained by David Price of IHS Cambridge Energy Research Associates, US, who mentioned that dwindling imports from the EU, coupled with carbon capture issues, have made India the new preferred destination for South African coal.

Gerard also pointed out the poor performance of rail transport company Transnet Freight Rail (TFR), which has been seriously affecting the South African industry’s ability to deliver more coal to the international market, at times when its competitors (Australia, Colombia and Indonesia) were also struggling to supply the market.

A subject perhaps more important to the local coal industry was the topic of coal supply to Eskom, the largest electricity producer in Africa and one of the largest in the world. In his paper, ‘Will Mpumalanga meet South Africa’s energy needs?’, the company’s chief commercial officer, Dan Marokane, stated that the supply of coal to Eskom power plants is at risk due to the potential increase of exports. This idea was somewhat supported by Susan Shabangu, Minister of Mineral Resources, in her speech ‘Government strategy for the future of the South African coal industry’. She mentioned restrictive regulation to control excessive coal exports. The response of the industry was fast. In a communiqué, the Chamber of Mines said that coal exports were not affecting Eskom’s future supply. It also stated that even rumours that the South African Department of Mineral Resources was to take steps to legislate the industry were highly damaging for the country, as future investments could be detrimentally curtailed by them.

The conference then reviewed the coal potential from sub-Saharan African countries, highlighting the theme of transport that presently prevents the exploitation and use of these coals. Countries such as Botswana, Mozambique and Zimbabwe are not yet ready to join the market as exporters but with the right amount of investment, may, in five to ten years, be the new source of African coal.

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