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Export quotas may be fatal misstep for SA coal sector - Report

Steel News - Published on Tue, 19 Jun 2012 reported that South Africa’s public enterprises minister Mr Malusi Gigaba’s suggestion at Eskom’s full year results presentation in Cape Town on last Thursday was that the South African government is giving thought to declaring coal a strategic asset as “Doing so would allow government to impose quotas on coal exports and, therefore, help Eskom secure all the coal it needs for the country’s future power generation needs.”

But while speaking at an investors and analysts presentation in London on the very same day, another minister Mr Norman Mbazima, representing South African coal industry, declared there was enough coal in South Africa’s coalfields for both Eskom and exporters. However, he was emphatic that government had to incentivise new mine build. said “Installing export quotas isn’t going to incentivise the private sector because these are the actions of a command economy and investors prefer free market policies.”

It added “There’s another question, too. If an export quota on coal is the way to secure energy supply, then just what is the provenance of the state-owned mining company, the so called African Exploration & Mining Finance Corporation (AEMFC)?. The creation of AEMFC was to compete with the private sector for exploration and mining assets it deemed strategic to the economy; coal, mainly. Just how many bites does government want at this?”

It added “There are better, more innovative ways to secure energy. A couple of months ago, Miningmx reported on Indian group Tata Power’s interest in establishing a joint venture with government on stranded coal assets.”

It concluded “Unfortunately, market forces can’t be restrained by state diktat. Banning exports in coal, or indeed in the chrome sector, will only create a vacuum to be replaced by other companies in other countries.”

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Posted By : admin on Tue, 19 Jun 2012
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