The Need for Public-Private Partnership Model in the South African Coal-Mining Industry

Abstract

Coal is a strategic commodity in South Africa as it is the Primary source of energy in form of electricity and synthetic liquid-fuels. It is also a feedstock in the heavy industries that include steel, cement, aluminium smelters and paper. Its role in socio-economic development spans over 100 years. Therefore, the importance of coal supply chain cannot be overemphasised. The mining industry and the role players comprises the South African government, public and private enterprises. Hence, there is need for collaboration of the three parties in a public-private partnership (PPP) model to enhance operational effectiveness and efficiency.The government role in the legislative environment, issuing of exploration, mining and water licenses among others is crucial for the industry. The state-owned corporations such as Transnet, the only national rail transport logistics company and electricity supply company (Eskom), the main electricity generating company and the leading customer/consumer of the South African coal underpins the extent of the state involvement in the industry. The private sector role of ownership of the coal-mines is dominated by the big five international organisations namely BHP Billiton, Anglo Coal, Xstrata/Glencore, Sasol and Exxaro and the black economic empowerment (BEE) companies or junior miners. The electricity and the liquid-fuels types of energy impact on all sectors of the economy. It is this complex relationship by all the role players in the coal-mining industry supply chain that requires enhanced collaboration in a PPP model to harmonise the entire operations in the value-chain. The relationship of the industry players was observed through the mining process, coal transportation to the domestic customers/consumers and export markets. The coal transport logistics infrastructures comprising conveyor belts, rail, road and water were explored and constraints requiring PPP solutions identified.

DOI: 10.5901/mjss.2014.v5n4p224