The errant Anglo American “child” was now back on track, South Africa’s Mineral Resources Minister Susan Shabangu told the IHS McCloskey South African Coal Exports Conference in Cape Town last week.

Anglo American Thermal Coal is South Africa’s largest energy coal producer and a major supplier to State-owned electricity utility Eskom.

Asked during question time how she would characterise her relationship with the Anglo American group following their public spat, Shabangu likened her role as regulator of the mining industry to that of a parent responsible for correcting a mis- behaving child.

“It’s more a parent/child relationship than two people hostile to [each other]”, and it had brought benefits in that she would be meeting with Anglo American chairperson Sir John Parker – the “grand- father”– which would improve relations still further.

“So it’ll be good for all of us,” the Minister remarked, to applause.

This geniality follows the Minister’s objection to what she perceived as Anglo American Platinum going out on a unilate- ral limb in proposing to close two mines, suspend four shafts, sell Union mine and retrench 14 000 employees.

“We need one another, each and every one of us,” Shabangu said earlier during her formal, prepared speech, in which she reported that all South African stake- holders were working tirelessly towards an enduring solution to the unprecedented levels of labour unrest that South Africa was experiencing.

She urged that mining’s benefits be made to flow to the South African public at large, which she said was the core of a debate that was not unique to the South African mining jurisdiction but “also found from New South Wales to Hunters Valley, in Australia, from La Guaria, in Colombia, to Indonesia and from Peru to Chile, in South America”.

Being Africa’s largest and most indus- trialised economy placed an onerous responsibility on South Africa’s coal mining industry, which, in 2011, was the highest revenue earner after producing 252.8-million tons of saleable coal and contributing 24% of total mining revenues.

Coal generated R87.8-billion in earnings and was South Africa’s fourth-largest mining export, contributing 18% of foreign exchange earnings.

“Coal exports generate valuable export earnings and improve the country’s trade balance,” said Shabangu, who also outlined the adulation that the African National Congress’s elective conference in Mangaung had afforded coal’s role as the fuel for 95% of South Africa’s electricity, 30% of its liquid fuel and 70% of its primary energy.

The industry remained the third-largest employer, accounting for 15% of total mining industry employment.

“As a government, we are not driven only by the need to maximise profits, which is the well known forte of the private sector, whether big commercial coal companies or emerging black coal companies.

“We have a responsibility to the people of this country to ensure that we create and maintain a coal mining dispensation that balances these imperatives with a need to achieve a social and economic dispensation that benefits all our citizens.

“Our role is akin to that of a trapeze artist. We have to bring everybody’s focus to the centre in order to achieve the ideal kind of mutual benefit,” Shabangu added.

Working with the Department of Public Enterprises, the Department of Mineral Resources had a regulatory responsibility to manage healthily the competition between exports and domestic coal markets.

“We will do this as we seek to ensure sufficient supply to both local and export markets,” she said.

The accelerated demand for coal, accompanied by an increase in international coal prices, had changed the buying patterns and structure of the local coal export industry.

The emergence of the export market for lower-grade coal had presented the government with a challenge in that it had constrained the availability of coal that was historically sold to Eskom.

Also, the current formulaic pricing model used for coal procured by Eskom was resulting in higher electricity costs.

This had been one of the major contributors to higher inflation over the past years, threatening investment in the economy as well as the purchasing power of indi- viduals.

Unless new and expansion projects reached their full development phase, additional pressure on the availability of coal was anticipated, owing to Eskom’s expected demand growth within the short to medium term.

That was important, given the role that was increasingly being played by emerging black-owned mining companies.

However, emerging black mining com- panies, on their own, could not muster the scale demanded by Eskom’s expansion plans.

In the same vein, it was important that emerging black mining companies played an important role in Eskom’s procurement process.

She would work with the Public Enterprises Minister to ensure that a significant portion of State procurement expenditure went through Eskom to black-owned companies that had significant black operational participation.

This was crucial in government’s quest to loosen the stranglehold that two or three companies had on the sector.

“There’s room for all, if we manage our sector’s affairs properly and fairly,” said Shabangu.

The government-adopted National Development Plan advocated that coal be exported in a sustainable manner to promote optimal use of the remaining resource.

“I cannot over emphasise the importance of energy security to our socioeconomic development objectives, which underpin our sustainable economic growth and access to energy by ordinary South Africans,” the Minister added.

South Africa had electrified 82% of formal households, 76% of all households and more needed to be done to ensure complete electrification.

It was necessary to balance energy costs with the need to address the historical legacy of affordable access to electricity and the economic growth prospects.

As coal remained an important compo- nent of South Africa’s future energy mix, it was paramount that the country worked towards a common objective, in which South Africa Incorporated confronted the challenges facing the coal industry and turned them into net positive opportunities for all.

While it had been resolved that certain minerals, including coal, should be declared strategic national resources, the right thing was to allow those affected to take the ini- tiative to reach a social, and indeed corporate, compact “in the interests of SA Inc, that place we all revere, even more so when Bafana Bafana are doing well”.

The findings of the government-commissioned coal resources and reserves study concluded by the Council for Geosciences would be released soon.

The report would allow coal development to interface with infrastructure planning mechanisms in government and enable the coal sector to do better.

In the long term, the study’s outcomes would present opportunities for new investment and sector growth.

The mining industry growth, development and employment task team, known as Migdett, was ensuring that the country was working towards unlocking coal’s developmental potential and giving effect to the possibilities presented by the country’s coal resources.

A task team would soon provide recommendations that would inform the strategy to place this sector on a positive growth path.

Through the identified strategic inte- grated projects, or Sip programme, options to unlock the Waterberg coalfields through appropriate infrastructure were being explored in line with the national energy security plans.

This was over and above the infrastruc- ture that would support the growth of the mining industry as a whole, including the coal sector.

In 2011, government established the Presidential infrastructure coordinating commission, or PICC, to accelerate investment in social and economic infrastructure.

This would be done by improving coordination and integrating planning around key infrastructure projects, as well as expediting project execution, bolstering local supply industries and increasing employment.

Government also recognised that mining required large quantities of water using current technologies.

In this regard, it invited coal producers and the research community to focus on the development of appropriate technology that would enable optimal exploitation of mineral resources with less water.

Coal mining could become the albatross of future generations if nothing was done about the impact of acid mine drainage on the water system, a problem which was persistent and which would need collaboration from government and industry.

The industry needed to ensure that environmental management programmes were dynamic.

“Our inspections reveal that there are companies that encroach beyond licensed mining boundaries, map their coordinates incorrectly and extend the size of their operation without proper authorisation, which leads to insufficient financial provision being made to cater for environmental liability,” the Minister said.

She urged the companies concerned to contact her department for assistance.