Coal production in Africa will increase at an average of three percent a year to 2011, on rising demand especially from Asia, a senior African Development Bank official forecast on Friday.

A sharp increase in oil prices, which touched a record high of $135 a barrel this week, coupled with rising gas prices, have given coal a new lease of life, despite concerns of its impact on climate change, said Abdul Kamara, manager at the Tunis-based continental lender's research division.

"The current sharp increases in oil and gas prices... coupled with rising energy demand particularly from ... China and India, have boosted concerns about the security, diversity, affordability and reliability of energy supplies around the globe," said Kamara.

"Coal has recently come back into fashion due to three advantages over oil and gas: lower prices per energy unit, higher reserves-to-production ratio, and a different geopolitical distribution of reserves," he said in a written response to questions from Reuters."

Kamara said South Africa, which holds most of the continent's coal reserves, will drive Africa's increased production by raising output to around 276 million tonnes by 2011 from an estimated 270-million tonnes in 2009.

Ingwe Collieries, Anglo Coal, Sasol, Eyesizwe and Kumba, which account for 85 percent of South Africa's saleable coal production, were expected to drive the increase, he said.

"Proven reserves are plentiful and production has been matched over the years by the development of new deposits," Kamara said of South Africa, a major global exporter of high-quality steam coal.

"The outlook for African coal production is bright. Production is expected to increase by an average of three percent per year up to 2011," he added.

Mozambique, with extensive coal reserves, was predicted to spend $30-billion on the development of coal and power projects over the next decade.

MOZAMBIQUE, BOTSWANA

Kamara said the June 2007 Moatize coalfields deal between the Mozambican government and Brazilian mining giant Vale, the world's largest iron ore producer, formerly known as CVRD, would see the southern African country significantly boost output.

"Mozambique is expected to become the second-ranked coal producer in Africa with the development of the Moatize Project in 2010," Kamara said.

Neighbouring Botswana was poised to become the third-ranked producer with the expansion of its Morupule Colliery in 2008 and the start of production at the Mmamabula East project in 2011.

Kamara said a shortage of power in southern Africa, particularly in South Africa, left Botswana with an opportunity to increase its coal exports to China and India, as well as to Zambia and Zimbabwe.