CAPE TOWN (miningweekly.com) – The declaration of coal as a strategic resource will not halt private participation and exports, says Mineral Resources Minister Susan Shabangu.

Coal’s strategic role will be formulated within the Mineral and Petroleum Resources Development Act (MPRDA) and its implementation will also be defined legislatively.

The proposed amendments to the MPRDA have been presented to Parliament.

“As government, we have agreed but it is going through a public process to ensure that it becomes part of our legislative framework,” the Minister says.

Shabangu, who addressed the IHS McCloskey South African Coal Exports Conference, says there will be a balance between what South Africa consumes locally without loss of the export market.

“What is key is to make sure there is a balance to satisfy security of local supply,” she says.

The government does not want to deny the coal sector, which was mining’s highest revenue earner in 2011, generating more than R87.8-billion, from continuing to deliver valuable export earnings.

At the same time, securing energy domestically is essential and the government wants to avoid having to face the sort of supply challenges that it has had to face in the past as a result of lower-grade Eskom-type coal finding higher-prices export outlets, particularly to Asia.

“We are going to engage the coal industry and will not be taking any unilateral decisions,” she promises.

Working with the Department of Public Enterprises, the Department of Mineral Resources sees itself as having a regulatory responsibility to manage the competition between exports and domestic coal markets “healthily” by seeking to ensure sufficient supply to both local and export markets.

The Ministry has noted that accelerated demand for coal, accompanied by an increase in international coal prices, has changed the buying patterns and structure of the local coal export industry.

The emergence of the export market for lower-grade coal has lessened the availability of coal that was historically sold to Eskom.

What needs to be more fully explained is why a formulaic pricing model that Eskom uses to buy its coal is resulting in higher electricity costs, particularly in view of it being a major contributor to higher inflation.

New coal mines and expansion projects are needed to meet Eskom’s expected demand growth.

That was important given the role that was increasingly being played by the emerging black-owned mining companies, which cannot meet Eskom’s demands on their own.

South African Mining Development Association president Bridgette Radebe reminds that Canada adopted a country-first approach when it refused to allow BHP Billiton to acquire potash assets.

Radebe says that it is also important for South Africa to identify strategic minerals and 12 have been singled out besides coal, starting with iron-ore and including chrome, vanadium, limestone and phosphates.