South Africa’s mines minister has revealed today that the country lost about 23 billion rand ($2 billion) in coal export revenues last year due to the drop in prices for the commodity.
Ngoako Ramatlhodi, speaking at the IHS conference in Cape town, said the continent’s most second biggest economy needs 100 billion rand in investment to develop its coal resources in the “short-to-medium” term and to expand production and improve infrastructure. “We are concerned about the extreme volatility in the coal price, which has a direct effect on the profitability of companies, contribution to the fiscus, as well as implications for employment,” he said.
South Africa is among the world’s largest producers of coal-producing, in the top five of coal-exporting, and more than a quarter of the produced commodity is exported. The mineral is the country’s third largest source of foreign exchange, only behind gold and platinum. However, with the global demand for the commodity falling against supply, its prices have been dropping. Last week the European coal futures hit a nine-year low, and Glencore’s South African coal unit, Optimum Coal Mines, said it have to close some of its mines and reduce annual production by at least 5 million tonnes, which could lead to over a thousand job losses.95 percent of South Africa’s electricity generation comes from coal; it accounts for 70 percent of primary energy and 30 percent of petroleum liquid fuels. The country’s power company Eskom, the main buyer of domestic coal, has been implementing rolling blackouts this year as it struggles to meet electricity demand following decades of underinvestment in new generating capacity.