South Africa moves to secure coal for domestic power plants

CAPE TOWN: South Africa has designated coal a "strategic resource", a move that could limit exports to protect supplies for domestic power plants, mining minister Susan Shabangu said on Wednesday.

State-owned power utility Eskom relies on coal to generate 85 percent of the electricity that powers Africa's biggest economy. It has raised concerns about the quality and quantity of coal received from mining producers.

Eskom has said coal producers have been favouring exports over supplies to the utility given higher returns in the export market.

"Our intention is to ... ensure there is a balance between security of supply locally but also without losing the global markets," Shabangu told a coal conference in Cape Town.

South Africa is one of the world's largest suppliers of thermal coal, shipping its product to Europe and fast-growing markets in Asia.

"We have not decided if it is going to be an export levy or the nature of that. Those are some of the debates in which we've got to engage," she added.

Shabangu said the decision would not be "unilateral" and would seek to balance the country's and the producers' interests.

Coal producers in South Africa include Anglo American , BHP Billiton , Exxaro and Xstrata.

Eskom is walking a tightrope to keep power flowing to factories, mines and smelters that had to shut for several days five years ago when the national grid nearly collapsed, costing South Africa's economy billions of dollars in lost output.

Copyright Reuters, 2013