Indian state firm targets SA resourcesAndr? Janse van Vuuren |...

Indian state firm targets SA resources
Andr? Janse van Vuuren | Fri, 07 Jan 2011 13:13




[miningmx.com] -- INDIA?s largest trading company, state-owned MMTC, is setting up shop in South Africa with its sights firmly on securing coal and other minerals and commodities for the country?s resource-hungry economy.

Speaking to the media on Friday ahead of the opening of the group?s South African office on Monday, chair and managing director HS Mann said this would be only the second time MMTC has ventured outside India, with another subsidiary located in Singapore.

The group is India?s single largest importer and supplier of bullion and a major player in coal and hydrocarbons, boasting a $10bn turnover in its previous financial year.

Mann said the sourcing of coal - both thermal coal for power generation and coking coal for the manufacture of steel ? as well as rough diamonds would be the main priority for MMTC?s local operation.

India is already the single biggest destination for South Africa?s coal exports. According to data released on Tuesday, 32% of the 63.4 million tonnes of coal exported from the Richards Bay Coal Terminal in 2010 was headed for India.

?Coal is very important to meet our energy requirements,? said India?s High Commissioner in South Africa Virendra Gupta, adding the group?s involvement could obviate the need for other middlemen in the trade process and consequently improve margins for both parties.

?When our commerce minister was here last year, we were looking at how we could deal directly in gold,? said Gupta. ?South Africa is a big producer of gold; India is a big consumer of gold. If you take out the mediators, it will be a win-win situation for everyone.?

He added the opening of an MMTC office in South Africa is a significant step forward in developing bilateral trade between the two countries to exceed $10bn by 2012, the target set during President Jacob Zuma?s visit to India in June 2010.

Mann said MMTC could also facilitate infrastructure development projects and other investments in South Africa, particularly emphasising possibilities in private power generation. However, MMTC would not pursue such investments itself as it is primarily focused on trade ? imports contributed 89% of its $10bn turnover in 2010.

EXPORTS VS DOMESTIC NEEDS

Gupta was unfazed about recent calls for more regulation in the coal industry, motivated by power utility Eskom?s difficulty in securing sufficient high quality coal.

In November, strategic market manager in Eskom?s primary energy unit Jeanie Moothoo said coal producers were increasingly focused on coal destined for export, because of the higher revenue this generated.

?Domestic pricing principles need to be clarified,? she said, according to a Reuters report. ?There needs to be a clear policy on coal exports versus domestic requirement.?

Similarly, Deputy Mining Minister Godfrey Oliphant said at a conference that the government may look at amendments to its mining act to protect local coal supplies from a push for exports.

Said Gupta: ?At the moment, South Africa is in the market. We will deal with the situation whenever this should change.?