The Chamber of Mines (CoM) has slammed State-owned utility Eskom’s call for a “country pact” regulating the pricing and supply of coal, saying that the utility should address its financial needs like any other business.
CoM CEO Bheki Sibiya, in response to Eskom CEO Brian Dames’ appeal to have future coal price increases limited to the inflation rate and firm commitments from industry to supply sufficient quantities of quality coal, said that the proposal could lead to investment contraction and weigh on economic growth.
The concept was based on two unrelated issues of Eskom’s supply and financial obligations, Sibiya added.
Demanding that the suppliers of coal contribute to Eskom’s debt repayments through artificial price controls will not only discourage badly needed investments for coal production, but will also lead to an indirect subsidisation of all Eskom’s customers by punishing a single industry, he explained.
Sibiya pointed to the need for offering an appropriate and competitive return to entice investors to fund significant infrastructure and new coal-mine projects.
He added that an unregulated market built on a transparent market pricing mechanism, where coal resources are abundant such as South Africa can, and will, deliver the targeted outcomes of both Eskom and government.
Simultaneously, it would benefit stakeholders, such as communities, investors and employees, through the optimisation of employment growth and skills development.