HomeEnergy MineralsSouth Africa wishes to make SA coal a strategic resource

South Africa wishes to make SA coal a strategic resource

Enoch Godongwana –
delegates are keen to
protect the country’s
coal reserves
Johannesburg, South Africa — 28 June 2012 – South Africa’s African National Congress (ANC) government is looking to make coal a strategic resource, to bolster the capacity of a state mining firm, and to hold off on imposing export taxes on minerals.

At a policy conference here this week the ANC, which has ruled since apartheid ended in 1994, is debating ways to have the mining sector in the resource-rich country pay a greater share to alleviate poverty, income disparity and chronic unemployment.

The ANC official charged with shepherding the party’s policies on transforming the mining sector, Enoch Godongwana, told Reuters that delegates are keen to protect plentiful coal reserves, used to produce almost all of the country’s power.

“It is not likely to have a major impact on the market. The truth of the matter is that we have enough coal in this country to continue to export,” he said. “The question is how much will be available for the domestic market and at what price.”

He also said the debate on mining had been “rational and responsible.”

These comments indicate that the ANC may be putting to rest calls that have alarmed investors from leftist elements in the party for blanket nationalisation of the sector – a move dismissed by President Jacob Zuma and seen by economists as having the potential to bankrupt the state.

Godongwana, who presented a policy paper on the mining sector to ANC delegates, said the party’s record of conservative approaches to Africa’s largest economy meant radical plans were unlikely to be adopted.

“We have been running this country for 18 years. Our macro-economic management speaks for itself."

First unveiled in February, the paper rejected calls for nationalisation in favour of higher taxes.

Godongwana also assured foreign mining houses that the ANC did not intend to introduce export taxes on minerals. “People have misread the document. We are not saying that we will impose an export tax. If you look at the wording it says, if other instruments don’t work.”

He said that despite a poor record with many state-owned firms, the party wanted to expand the role of a state mining firm and give it preferential treatment.

Deliberations on mining policy will last through the week and it may take months for a final paper on the debate to be produced.

The ANC meeting ends on Friday with all-party deliberations held behind closed doors. Recommendations will be voted upon at an ANC meeting in December.

Source: Reuters Africa. For more information, click here.