The decline in coal prices has cost South Africa US$2 billion in lost export revenue, the country’s Mineral Resources Minister, Ngoako Ramatlhodi, said.
“We are concerned about the extreme volatility in the coal price, which has a direct effect on the profitability of companies, contribution to the fiscus, as well as implications for employment,” he said at the IHS Energy South African coal exports conference in Cape Town.
According to Bloomberg, the price of coal leaving the terminal at South Africa’s port of Richards Bay, the world’s single-largest facility for the fuel, has dropped 47% since the start of 2011 because of a global glut of the seaborne variety that Deutsche Bank AG says is poised to triple this year. Anglo American Plc, BHP Billiton Ltd and Glencore Plc mine the mineral in Africa’s second-biggest economy.
About 80% of South African coal is now mined in the northeastern Mpumalanga basin, a site with about 30 years of reserves left at current production rates, according to state-owned power utility Eskom Holdings SOC Ltd, which uses coal to generate about 80% its electricity. While the northern Waterberg basin has reserves that may last more than 90 years at full output, they are located in an environmentally sensitive area that lacks rail links to power plants.
The country has more than 66 billion t of economically extractable coal, which will require a minimum investment of 100 billion rand in extraction, infrastructure and logistics, Ramatlhodi said.
State-owned African Exploration Mining and Finance Corp., which is already active in coal development, “will be augmenting its portfolio to contribute towards greater security of supply,” he said.
Mining companies operating in South Africa need to reserve a 26% stake for so-called black economic empowerment, in line with government regulations seeking to help make up for the discrimination against non-white South Africans in the economy before the end of apartheid in 1994.
Ramatlhodi said he does not “intend to increase” the requirement, but encourages black ownership in mining.
Edited from various sources by Sam Dodson
Read the article online at: https://www.worldcoal.com/handling/04022015/coal-dip-hits-south-african-economy-1841/