[miningmx.com] – SOUTH Africa’s transport utility, Transnet, and the country’s coal producers are negotiating whether to include the declaration of coal as a strategic mineral as a force majeure event that would affect take-or-pay tariff agreements on the coal line.
“There may be a force majeure clause in there that allows for possible government intervention on coal exports,’ said Brian Molefe, CEO of Transnet.
He did not give further details on how the tariff agreements could be adjusted in the event coal was declared a strategic mineral by the South African government. “The negotiation process continues,’ he said.
“It is under discussion,’ said a senior officer at one of the country’s coal exporters. BHP Billiton Energy Coal South Africa (Becsa) and Anglo Thermal Coal had not responded to inquiries regarding the matter.
In terms of proposed amendments to the Minerals & Petroleum Resources Development Act (MPRDA), which has yet to be signed into law, the mines minister has discussion to declare certain minerals strategic.
The practical implication of this is that the government could ask coal exporters to sell a certain portion of their product to local users – namely Eskom – at lower than market or development prices, as it is termed.
Becsa was the first company to sign a new tariff agreement for coal exports with Transnet. The deal, announced on September 30, was a 10-year take or pay agreement worth an estimated R24bn ($2.17bn) and will allow Becsa to add 800ktpa to current volumes as and when Transnet’s ratchets up capacity on the coal line to 85 million tonnes a year.
Molefe said the other 28 users of the coal line were due to sign their tariff agreements before the year-end. It’s unclear how the force majeure clause could be written into the take-or-pay agreements once signed.
