Cape Town, South Africa — ESI-AFRICA.COM — 03 February 2011 – In a clear indication of protection for Eskom, the South African government has warned that it will not allow South African coal producers to cash in on the soaring international demand for the commodity to the detriment of the national power utility.

Issuing this warning at the McCloskey Coal Conference here, mines minister Susan Shabangu stopped short of branding coal a strategic resource, but said the state would be monitoring exports closely, given Eskom’s well-publicised difficulties in securing sufficient high-quality thermal coal.

“The lack of regulation of the coal mining industry resulted in a shift in the power balance away from the national interest to that of the shareholders of the mining companies,” she said. “Eskom has lost some share of its historical market. “This has also impacted on the quantity, quality and cost of coal supplied to Eskom,” she added.

“It is not government intention to enter the minefield of specifying all the processes, and it is our fervent hope that industry will recognise the particular challenge and work with us.”

Shabangu singled out India’s growing interest in securing coal from South Africa for its own energy needs. Pointing to the fact that the Asian country had accounted for a third of coal exports in 2010, she said its interest in South Africa would be compounded by the drop in supply from Australia due to ongoing weather disruptions.

“Is this what South Africa needs, and what will the effect of this increase in exports be on our local market?” she asked.

“Some will see an opportunity of making more money on the back of the Australian misfortunes. Unfortunately that opportunity may very well be a serious threat to our supplies for electricity generation and to being part of the uptake of the economy following the recession,” Shabangu stated.

Eskom CEO Brian Dames has already hinted at a formula-based export quota for miners.