Local media reported that the South African government is considering declaring coal a strategic resource. South Africa, as a coal intensive economy, needed to respond to this challenge. Quotas could be implemented, prescribing the quantity and quality of coal which could be available for domestic use.

SA’s Public Enterprises Minister Mr Malusi Gigaba at Eskom's annual results in Cape Town said “We are engaged in discussions with the ministers of mineral resources and energy to secure the security of supply of coal. We need the right volumes and the right quality of coal, at the right prices."”

Mr Brian DamesCEO of Eskom added “Electricity is regulated, but coal is not. Our top priority is the security of supply for South Africa." Coal is our biggest input cost, and filters directly into the tariff. Our expectation for the following year is that coal goes up by a single digit. It is very important that we achieve that.”

Eskom had traditionally bought low grade coal for its power stations from suppliers, leaving high quality coal to the export market. However, demand from Asian countries, particularly India, had increased in recent years. This had pushed prices up, affecting Eskom's coal stockpiles. In the year to March 2012, Eskom had seen coal prices increasing by 17%. In addition, to sustain the increased load on its power stations, a higher grade of coal i needed.

Source - business.iafrica.com

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