JOHANNESBURG – South Africa’s banks should be forced to invest in new coal mines in the country, the ruling African National Congress’s head of economic transformation said.
Nedbank Group and Standard Bank Group have said “they are not going to put money in coal any more,” Enoch Godongwana said in an interview on Carte Blanche, a Johannesburg-based investigative television programme. “To me, that’s an invitation for prescribed assets,” he said in a reference to the party’s investigation of whether to force pension funds to invest in developmental projects.
While Standard Bank and Nedbank, two of the country’s biggest lenders, have said they won’t invest in coal for environmental reasons, South Africa is heavily reliant on the fuel for power generation. The country has 66-billion metric tons of coal reserves, according to Godongwana. Eskom, the State power utility, has said new mines aren’t being opened quickly enough to ensure supply for its power plants.
“Who determines policy? A government of the day determines policy,” Godongwana said. “You can’t therefore have individuals determine what is the policy of the country.”
A move toward prescribed assets, while mentioned in the ANC’s election manifesto, would concern international investors and could destabilize South Africa’s R4-trillion rand pension industry.
“Most investors and local business leaders appear to think that prescribed assets will never end up happening,” said Peter Attard Montalto, head of capital markets research at Intellidex. “This interview seems to suggest otherwise and in a surprisingly specific way on coal.”