Study of the embargo of coal exports from South Africa Report of a study conducted under the auspices of the Group of Independent Experts appointed by the Governing Body of the ILO to follow up and monitor the implementation of sanctions and other action against apartheid

38983

International Labour Office Geneva

Copyright © International Labour Organisation 1992 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorisation, on condition that the source is indicated. For rights of reproduction or translation, application should be made to the Publications Branch (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland. The International Labour Office welcomes such applications.

ISBN 92-2-106471-9 First published 1992

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Printed by the International Labour Office, Geneva. Switzerland

Preface

The ILO Declaration on Action against Apartheid and the Programme of Action against Apartheid which is annexed to it were updated by the International Labour Conference in June 1988. Both the Declaration and the Programme of Action stress the importance of sanctions as a principal means by which the international community can assist the process of bringing about an end to apartheid, and they accordingly urge the adoption of appropriate measures to that end by governments, employers' and workers' organisations as well as by the ILO itself.

The Group of Independent Experts has held seven meetings to date. One of the means decided on for the monitoring of action was the adoption by the Group of Independent Experts of a revised format for the questionnaire which has been distributed each year to ILO constituents so that more precise information may be obtained on the manner in which they have given effect to the requirement of the Declaration and the Programme of Action. In addition, as a means of implementing the request of the 1989 Session of the International Labour Conference that certain areas be targeted for immediate attention, the Goup of Independent Experts decided to authorise studies on particular topics, including those related to financial sanctions, a coal embargo, air links and the effect of sanctions on employment.

The session of the International Labour Conference which updated the Declaration and the Programme of Action also requested the Governing Body of the International Labour Office to make provision for the establishment of a special monitoring group of three independent experts to follow up and monitor the implementation of sanctions and other action against apartheid. That body was established by the Governing Body at is 243rd Session in May-June 1989 which appointed the following persons as members for a period of three years: Mr. Ahmed Abdallah (Kenya), Prof. T. van Boven (the Netherlands) and Prof. R. Nettleford (Jamaica).

The first of these studies, concerning financial sanctions, was published in 1990. This, the second, was approved by the Group of Independent Experts at its seventh meeting, held in New York in September 1991. At its previous meeting the Group of Independent Experts reached interim conclusions on the study, which were confirmed at its seventh meeting, when it also decided that the report should be published.

iii

Table of contents

Executive summary

Chapter 3 Policies

VII

Chapter 1 Coalmining in South Africa I. II.

I.

1.1

Introduction

Countries of the European Community 17 18

The structure of the industry

1.3

United States of America

19

II. 1 The cost structure of coalmining and coal exports II.2 The cost of producing coal in other countries

1.4

Commonwealth countries

19

1.5

Eastern Europe

19

1.6 Asian countries

19

1.7 Africa

20

1.8 Trade unions

20

6

IV. Occupational safety and health

6

Employment and wages

I.

Introduction

9

II.

Exports of South African coal

9

III. International market trends IV. South African coal exports: By country Projected market trends

Chapter 4 Evasion and supervision

22

I.

Introduction

22

II.

Avoidance and evasion

22

II. 1 Export via Maputo

22

11.2 Changing of origin by re-exportation

22

II.2.1 Pure South African coal

22

H.2.2 Mixed coal

22

7

Chapter 2 Export markets for South African coal

V.

17

1.2 The Nordic countries

III. Productivity

V.

Sanctions measures adopted against South African coal

17

10 11

11.3 Inaccurate customs declarations

22

11.4 Effective supervision of an embargo

23

11.4.1 Documentary controls

23

11.4.2 Physical analysis of the coal

23

14

v

Conclusions

26

Bibliography

28

Executivesummary

7. Italy and Spain are the two largest importers of South African coal in the EC and, although South African coal exports to the Federal Republic of Germany fell 13.7 per cent in 1989, South Africa remained the largest single supplier. Hong Kong, Japan, South Korea and Taiwan have all increased their imports of South African coal substantially since 1985. It has recently been revealed that Romania and China have been importing South African coal.

1. South Africa is the world's third largest exporter of coal, after Australia and the United States. In the category of steam coal (used mainly for power generation) it occupies second place in the world market. The EC and Japan remain the most important markets, and significant new markets have been developed in South East Asia. 2. Coal is South Africa's second largest source of foreign exchange after gold. The volume of coal exports in 1990 was 49.4 million tons; in 1989, coal exports were worth 1.36 billion US dollars.

8. Denmark is the only country in the EC to have imposed a total coal embargo, and France and Ireland have adopted partial boycotts. Norway, Sweden and Finland have also embargoed imports of South African coal, as has the United States. The Commonwealth countries banned imports of South African coal in 1986, although the British Government dissented. The three major international trade union federations, the International Confederation of Free Trade Unions, the World Federation of Trade Unions and World Confederation of Labour, as well as the European Trade Union Congress, have all adopted resolutions in favour of a coal embargo.

3. Export sales are particulary important to the South African coal industry. The stagnation of the local economy means that there is little new demand for coal, and earnings on exports are exceptionally high due to the weak exchange rate of the rand against the dollar. Only some 25 per cent of total coal output is exported, but exports account for over 60 per cent of earnings. 4. The South African Government has played an important role in boosting coal exports by building a special railway line and port facility at Richards Bay, and offering preferential rail tariffs.

9. South African coal exports may avoid or evade embargoes in various ways: (i)

5. South African coal exporters enjoy substantially lower production costs than their competitors, and this has enabled them to lower prices in the world market to a level that largely negates the effects of sanctions. Expansion of coal exports was assisted by the existence, and development, of good infrastructure, ample managerial and financial expertise in the well-established mining industry, occasional help from government, very favourable geological features, and plentiful supplies of cheap labour. In addition to price cutting, a distinct sanctions discount applies to South African coal. This has been faciliated through low taxation and the operation of a consortium which distributed export profits to offset development costs.

Coal exported via the port of Maputo in Mozambique is often misrepresented as coal of Mocambican origin.

(ii) The re-export of South African coal from a non-boycotting country may provide an opportunity for re-labelling the coal as originating in the country of re-export. (iii) Mixing South African coal with coals of other origin to produce a coal blend (e.g. "Dutch blend") is a common practice which may or may not be intended to avoid embargoes against South African coal. (iv) Customs documents may be filled in inaccurately, or falsified, in order to disguise the origin of the coal. South African coal has been illegally imported, falsely labelled as coal originating from another country.

6. Low wages provide South African producers with a considerable cost advantage: one estimate suggests these are only 20 per cent of those paid per ton of coal produced in the nearest competitor country, and less than a tenth of that paid per ton to miners in the most expensive producer country. The rate of total accidents in South African mines also remains among the highest of those in producer countries.

10. The supervision of a coal embargo can be pursued through documentary and/or physical checks. A certificate of origin should be required for all shipments of coal, and this must specify where the coal was mined. Coal blends, however, cannot be easily checked via certificates of origin, and in a number of countries false vn

certificates are apparently provided. To guard against such practices, various methods of physical analysis can test the origins of the coal. There is some general support amongst coal purchasers for a system of physical checks, as this guarantees that they are receiving the correct quality of coal. The Danish Government insists that the

end consumer subject coal to a chemical analysis to determine its origin. Another option in the petrological technique of analysis, used by British Coal amongst others, which appears to be a reliable and practical method.

viii

Chapter 1 Coalmining in South Africa

I.

176.4mt of saleable coal and 4.21mt of saleable anthracite. In 1990 the total coal production was 173.6mt.2

Introduction

The first coalmining began in South Africa in 1864 near Molteno in the Cape Province. By 1989 there were 18 principal coalfields scattered over an area which measured 700km from north to south, and 500km from east to west. The coalfields of the Transvaal were generally of bituminous coals in seams several metres thick, while those of Natal were often anthracitic, occurring in relatively narrow seams.

The Transvaal Province accounted for 84 per cent of the total coal output, the Orange Free State for 9 per cent, and Natal 6 per cent, in 1989. Of South Africa's underground coal output, about 45 per cent was produced using the highly mechanised bord and pillar method, some 6.2 per cent by longwalling, and 9.2 per cent utilising the pillar recovery method. The other 9.7 per cent of coal was produced by opencast mines.

Coalmining in South Africa grew at a rapid rate after the mid-1970s, in response to a combination of favourable market factors. A fear of oil shortages gripped South Africa after the overthrow of the Shah of Iran, whose regime had been a major supplier of oil to an embargoed South Africa, and renewed world demand for coal in the wake of the oil crises of 1973 and 1979 increased demand for coal-based electricity power generation.

Coalmining in South Africa was dominated by a few companies running very large collieries. The AngloAmerican groups' coal operation (Amcoal), accounted for 24 per cent of saleable tonnage, and those of Gencor (Genmin Coal) 19 per cent, Sasol 20 per cent, Rand Mines 17.3 per cent, Iskor 5 per cent, JCI 3 per cent, Lonrho 3 per cent, and Gold Fields Coal 2 per cent.3

Between 1974-1989, domestic sales of coal increased by 5 per cent per annum by mass, and 22.1 per cent per annum in value. Coal provided some 83 per cent of South Africa's energy requirements. Exports grew even more strongly, at an annual average rate of 22.3 per cent by mass and 40.7 per cent by value.1

II.l

The cost structure of coalmining and coal exports

In the 1980s sanctions against South African coal were imposed by a number of States, notably the USA, France, Denmark and the Scandinavian countries. Pressure on countries which had not adopted formal embargoes was applied by trade unions, political parties, international governmental and non-governmental organisations, and church groups. And yet, South African coal exports continued to grow in the late 1980s, and earned vital foreign exchange well in excess of R3bn in 1989 and 1990, placing coal second behind gold in terms of contribution to the balance of payments.

This expansion was assisted by the existance, and development, of good infrastructure, ample managerial and financial expertise in the well-established mining industry, occasional help from government, very favourable geological features and plentiful supplies of cheap labour.

II. The structure of the industry

This export growth in the face of sanctions was all the more remarkable because the world market was well supplied with coal, and new competitors were entering the market all the time. Simultaneously, South African producers were being confronted by new wage demands from an increasingly unionised workforce, and higher railage charges imposed by the South African Transport Services (Sats). It is necessary to inquire, therefore, how South African coal exporters managed to thrive under such adverse conditions.

It was estimated in 1989 that South Africa had recoverable reserves of some 58 billion sales tonnes, 18 billion tonnes of which were controlled by the Government in terms of the Reserve Mineral Development Act. These would be made available to Sasol and Iskor, the ex-parastatals involved in oil-from-coal extraction, and iron and steel production, respectively. Of the remaining reserves, Anglo-American Coal (Amcoal), held 14bn tonnes, Gencor 9bn and Rand Mines 8bn. Shell, JCI, Anglovaal and Gold Fields South Africa all held much smaller amounts.

A large part of the answer is to be found in the economics of the industry. South African coal was, and remains, the cheapest on the world market, thanks to the fortunate combination of a number of factors.

At the end of 1989 there were 102 collieries, including 20 anthracite mines, which produced a total of 1

taxable profits of existing mines. This meant that they did not have to wait for each new mine to become profitable before being able to take advantage of the tax deductions entitled to it.

Essentially, the nature of the coal deposits themselves makes them cheap and easy to mine using modern, capital-intensive methods. Compared with other parts of the world, South African coal deposits occur at very shallow levels. An estimated 96 per cent of reserves lie at depths of less than 200m, and much of the best quality steam coal is found less than 70m below the surface.

After 1985, however, the South African Receiver of Revenue restricted the income base against which capex allowances could be used to income generated by mines contiguous to the mine entitled to the tax allowance. This made it less viable for companies to launch greenfields expansions, and encouraged brownfields developments which remained on the same site as existing activities.

The seams are relatively thick, with an estimated 46 per cent between 4-6m thick, and another 33 per cent between 2-4m thick. They are also generally horizontal and unfaulted, free of cleats and joints and of floating stone. As a result they are suitable to the application of modern mining methods. The coal is, however, hard and abrasive, making it difficult to cut.

From the start of the 1984 tax year, coal mines were taxed at a nominal rate of 50 per cent, and from 1985 onwards a surcharge of 15 per cent applied as well. However, the actual rate of tax paid varied according to capex allowances and the profitability of operations. In fact, taxation paid as a proportion of total coal sales ranged from 5.3 per cent in 1979/80, to 2.1 per cent in 1981/82, to 4.9 per cent in 1986/87. Coal taxes as a percentage of total tax revenue from mining reached a high of 7.7 per cent in 1986/87 but, historically, were normally below 5 per cent. In money terms, coal mines paid some R265m in tax in 1986/87, a full RIOOm more than the previous year.4

The room and pillar method was the main approach to mining coal in South Africa, but this declined steadily from 80 per cent of total output in 1975, to 49 per cent in 1987. The amount of coal produced in opencast mines doubled in that period to stand at 36 per cent of total output. In 1987 pillar extraction methods produced about 9 per cent of output, with continuous miners responsible for 80 per cent of that figure. Another 8 per cent of total output came from longwall operations.

In the mid-1980s typical r.o.m. costs of producing bituminous coal in the Transvaal varied from R12-R19 per tonne, unwashed. Washing added another R4-R5, taking it to R17-R23 per tonne. At that stage costs had been escalating by between 14-18 per cent per annum, roughly in line with the rate of inflation.5

Mechanisation increased in the 12 years from 1975 to 1987. The number of continuous mining machines grew from ten to 135 units, and the hand loading of coal declined from 20 per cent of total output to less than 1 per cent.

Costs in Natal tended to be some 50 per cent higher for washed coal, because the coal seams were much more narrowly faulted and more difficult to mine than those in the Transvaal.5

The costs of mining coal are calculated in different forms. The run-of-mine (r.o.m.) production cost represents the cost of mining the coal and delivering it to the stockpile or primary crusher. A contribution to head office costs and certain other services is also included.

Working costs began rising at above the rate of inflation in the late 1980s, squeezing profit margins and threatening the potential for future developments. The Witbank colliery, for example, had average increases in working costs per ton mined of 18.3 per cent for the period January to September 1990. This figure did not reflect the full impact of the wage increases negotiated with the National Union of Mineworkers which came into effect in July 1990. The NUM argued that, unlike the gold mines, coal mines were still highly profitable and therefore demanded higher wage increases. The settlement finally reached provided for increases of between 14 per cent and 30 per cent depending on the job category. Trans Natal Coal estimated that its black wage bill had increased by 19 per cent on average as a result, which was some 4 per cent above the rate of inflation.

The free-on-rail (f.o.r.) production cost is the r.o.m. cost plus surface handling, beneficiation (crushing, washing, screening), storage and loading costs. It includes provision for the cost of discards after washing. One ton of r.o.m. coal may yield only 750kg of saleable product. The total cost ex-mine equals the f.o.r. plus a provision for the amortisation of initial capital expenditure (capex). Capex by the four largest quoted coal companies grew from R155m in 1980 to R516m in 1985. At 1986 price levels, a greenfields steam coal mine expansion would have involved capex of R140 per annual tonne, which, spread over the 30-year life of the project at an 18 per cent discount rate, would have required a provision of R25 against each tonne of coal sold. That was more than the f.o.r. cost of Transvaal steam coal for export prevailing at that time, and would have doubled the cost of producing coal for export. It was therefore not realistic to expect new greenfields ventures in the absence of a dramatic rise in coal prices.

The coal industry has also had to cope with lost productivity due to labour unrest, particularly in the first half of 1990 which was characterised by record rates of work hours lost through industrial action. In addition, rail freight charges on the Richards Bay coal line were increased by 17.8 per cent. Railage increased from R12.07A to R26/t, and Richards Bay Coal Terminal charges were up from R5.63/t to R8.58/t, and on-mine costs of production from R28.45A to R44.83/t.

Coal companies tried to absorb the high cost of capex by placing all their mines in one company and then writing off the cost of capex on new mines against the 2

South Africa, however, occupied a central position vis-a-vis its most important markets in Europe and the East. Its costs remained relatively constant, compared with other exporters who may have been closer to one market but farther away from others. Any increase in sea freight charges therefore tended to hurt competitors in at least one of the South African exporters' major markets.

On this basis Dr. Kevin Kartun estimated that total operating costs on a typical export mine had risen 74 per cent from R44.17A in 1976 to R76.96A in 1990. He forecast that total operating costs would increase by 11.5 per cent in 1991 to R85.83A FOBT Richards Bay. Such coal was worth $33.82 in January 1991, which would imply a cut in the margin of profit from 14.6 per cent in 1990 to 10.5 per cent in 1991. This calculation however, was based on a rand/dollar exchange rate of R2.70-S1. The rand strengthened considerably, however, and if it stayed strong profit margins would be cut even further.

Sea freight charges for coal $/Iong ton

Transvaal steam coal was the cheapest available anywhere in the world in the 1980s, both because it was cheaper to mine, and because the extremely efficient Richards Bay Coal Terminal (RBCT) could take ships of more than 170,000 dead weight tonnes (DWT). The RBCT was opened in 1974, with a 585km railway line purpose built to transport coal from the Transvaal coalfields. Finance for both the coal terminal and the railway line was raised under guarantees provided by the coal exporters. The terminal was owned by the exporters, with the land on long lease from the South African Transport Services (Sats). In the next five years South Africa's share of world steam coal trade increased from 4 per cent to a peak of 40 per cent in 1979. With increasing competition from Australia, Colombia and others, South Africa's share of the world market consolidated at around 30 per cent. 5

Origin-destination

1986

1987

1988 % change 1986-88

Australia-Europe RBCT-Europe Colombia-Europe US Gulf-Europe Australia-South Korea RBCT-Hong Kong US Gulf-Japan

6.63 4.78 4.35 5.05 4.70 4.20 6.30

10.85 7.10 n.a. 6.25 n.a. 6.25 10.70

11.50 10.63 6.00 5.90 4.60 7.48 11.55

+ + + + + +

73.5 122.4 37.9 16.8 2.1 78.1 83.3

Another factor contributing to the competitiveness of South African exporters in the 1980s was the degree of cooperation between them. The Transvaal Coal Owners' Association (TCOA) operated an export profits pool in which members were allotted certain quotas of steam coal which was sold on both the domestic and export markets, with only the most cost-efficient collieries supplying coal for export. These export collieries were paid the domestic price for coal on delivery, and the profits from the exports (net of railage and loading charges), went into a pool to be distributed amongst all the members. Any new infrastructure required for exports was then financed from the pool. (The TCOA has since handed back its export allocation to its members who now operate independently.)

However, the cost of export infrastructure started to escalate in the late 1980s, and threatened to undermine the competitive edge enjoyed by South African exporters. The capex involved in expanding the RBCT was allocated according to the length of time each exporter had been participating in the RBCT. Older users were regarded as having borne a greater share of the risks and development costs, and were consequently expected to bear less of the expansion costs than newer users. The existing users who had participated from the beginning therefore did not face serious increases in loading costs per tonne of coal, but rail freight charges, as determined by Sats were a real threat to profitability.6

An estimate of steam coal pool profits for 1986 put the f.o.b. price at RBCT at $25.60/t (R57.53), from which was subtracted railage (R11.35A), RBCT charges (R1.95A), and wharfage (R0.84A), and the domestic B grade price of R19.15, leaving a pool revenue of R24.24/tonne. The pool exported 5.66mt in that year, giving total revenue of R137.1m, less overheads of RIOm, leaving net pool revenue of R127.1m to be distributed amongst its members.7

In April and September 1987 Sats increased rail freight charges by 56 per cent and 20.9 per cent respectively, giving an effective 88 per cent increase on rates paid for Phase I and II tonnages the previous year. The increases were opposed by coal exporters, and Sats agreed not to raise rates again until April 1989.

It is interesting to note that the 1986 railage charge of R11.35 was up from R9.00 the previous year, and was expected to increase to R17.30 in 1987. By September 1987 average prices for South African coal exports were only R50.78A, far lower than in 1986, and with higher transport costs. Some coal mines were not even covering costs. This was undoubtedly the low point for South African coal exporters. France, Denmark and the USA had just embargoed imports of some lOmt pa, the world market price was dipping towards the $20/t level, and domestic rail charges had just shot up. At least part of the blow from lower prices and higher costs was cushioned by a weakening in the exchange rate of the rand in 1988, which boosted export earnings. Dollar

Sea freight charges may amount to 30 per cent of the cif value, and increased strongly in the period from July 1986 to July 1988 when sanctions against South Africa were at their most fierce and cost was crucial to the survival of the South African coal export trade. Between July 1986 and July 1988 freight rates from RBCT to Hong Kong increased by 78 per cent, and by more than 122 per cent to Europe. 3

prices for coal exports began to improve again in 1988. By September 1988, the rand price of coal was back up to R67.02.

Country Operating Capital Tot. Rail costs costs

A comparison of the rand costs of export coal compiled by Ferguson Bros, showed an increase from RIO/t in 1978 to R51/t in 1987 and R59/t in 1988. Average Rand receipts in 1987 were barely higher than costs, at R54, but improved to R65 in 1988.10

USA: East 28 West 21 Canada 22 Austr. 16 S.Afr. 9

The situation of coking coal exporters was a lot better than that of steam coal exporters, but coking coal accounted for only a tiny proportion of South Africa's coal exports. The bulk of South Africa's low ash coal exports were allocated to the TCOA. A low ash pool with participation by AMCOAL, WITBANK and GF COAL had a ten-year contract to supply 2.5mtpa to a consortium of Japanese steel mills up to the end of March 1987. It was then renewed for a three-year period at an annual level of 2.25mtpa with the price negotiated annually. In 1987 the price was $33.80/tonne, considerably higher than steam coal exporters were getting at that time. Although the South African supplies were only a small percentage of total Japanese imports of coking coal (always less than 5 per cent), they performed a vital function in setting low prices that the Japanese could then use to bargain with their other higher cost and larger volume suppliers.

5 7 8 8 8

33 28 30 24 17

15 24 14 7 10

Port

Tot. Calorific value MJ/kg

2 6 3 4 2

50 58 47 35 29

27.85 27.85 27.85 27.85 25.53

To deliver such coal, ci.f., measured in 1985 US dollars per MMBtu, cost:

USA East to: Canada Australia South Africa

Europe

Japan

Other Asian

2.08 2.29 1.89 1.47

2.25 2.18 1.70 1.47

2.29 2.18 1.70 1.51

The tables show clearly that the costs of producing and delivering steam coal were lowest for the South African producers. The figures reflect the situation in 1985 and 1986 prices, just at the time that South African producers were facing their most severe boycott threats, and when the market was relatively oversupplied with coal. Lower production and transport costs clearly facilitated the South African exporters in extending their market share in that crucial period.

The working profit on each tonne of low ash coal exported was estimated to be R48.25/tonne in 1986. The profit margins on both steam and coking coal exports were certainly wide enough to enable South African exporters, who were already the cheapest in the world, to launch and survive a concerted price war in 1987. Some parcels of steam coal were sold at under $20/tonne f.o.b., and term contracts averaged $22-$23/t f.o.b. That was at least $20 less than the prices demanded by Australian and US suppliers, according to Wharton Econometrics. The discounts on offer largely served to persuade old and new customers to ignore any sanctions pressures which had been building up against South African coal on the world market.

The cost of delivering steam coal, in 1986 US dollars, broken down to reflect the f.o.b. cost plus debt financing (col. 1), then the delivery cost (col. 2), and the total cost at Amsterdam, Rotterdam, Antwerp, the socalled ARA cost (col. 3), was as follows:

II.2 The cost of producing coal in other countries In 1986 most British coal cost 180 per cent more than imported coal, and similarly, in the then Federal Republic of Germany, the majority of the local product was 250 per cent more expensive than imported coal. This obliged the EC to pay high subsidies, $2bn in 1986, which, according to Australian Premier Mr. Hawke, amounted to $25,000 per worker.9 James Capel and Co. estimated that the average government subsidy, in $/ton, in 1986, came to $1.85 in the UK, $28.50 in the FRG, $32.20 in France, and $40.82 in Belgium.10

Col.l

Col. 2

Col. 3

South Africa Opencast Underground

13.50 19.00

7.49 7.49

20.99 26.49

Australia NSW underground NSW opencast Queensland open.

31.00 30.50 22.00

12.32 12.32 12.32

43.32 42.82 34.32

Colombia New opencast

50.00

5.95

55.95

USA Large underground Large opencast

42.00 40.50

5.94 5.94

47.94 46.44

Sources: Prof. Don Barnett, Mac Quarie Univ. and Ocean Shipping Consultants.

This table shows clearly that South African producers were able to put coal on board a ship for delivery at a substantially lower cost than their nearest competitor (col. 1), and even though their transport costs were not the lowest (col. 2), they landed their coal in ARA for some $13 less than any other producer (col. 3). In response, many other coal producing nations have erected

The Chase Manhattan Bank calculated that the cost of producing steam coal for export in 1985, measured fob at the pier in $/metric ton, was as follows.

4

An analysis of coal export prices and qualities prepared by the South African Minerals Bureau showed that measured in dollars per ton (col. 5) and cents per gigajoule (col. 6), South African steam coal presented the best value for money at the end of 1987 and beginning of 1988. Column seven provides an index of the percentage ash content and the price expressed in dollars per ton.12 The prices quoted below represented a loss for most of the world's steam coal producers. A number of Australian mines actually had to close, and the price trough precipitated a painful restructuring process in certain countries.

barriers to cheap imports, and provided massive subsidies to their mining industries to enable them to market coal at reasonable prices. In the Federal Republic of Germany, the Jahrhundertvertrag (literally the Century Contract) committed the electricity utilities to buying 45mt per annum of domestic coal until 1995. This was costing them more than three times the market price prevailing at the end of 1988. The steel mills were also tied to contracts with domestic suppliers. The Government was obliged therefore to spend some DmlObn each year to compensate the utilities and the steel mills for the inflated prices they had to pay for local coal. This arrangement is so expensive that the Frankfurter Institut suggested that it would be cheaper for the Government to pay all of the FRG's 155,000 coal miners to stay at home, and to let the utilities and mills buy imported coal instead.

A comparison of steam coal prices by quantity and quality

An analysis conducted by the United States Department of Commerce in 1989 showed that the bulk of the coal on the world market, some 71 per cent, was produced by four countries which received very little government assistance. These four "market competitive" countries were Australia, with exports of 102mt in 1987, Canada, with 26.7mt, South Africa with 42.6mt, and the USA with 72.2mt. These market competitive countries produced 35 per cent of the world's coal without any government assistance in the form of labour subsidies, import protection, price or sales aid. Except for Canada, no direct operating grants were received. Canada and South Africa did receive investment aid, and all four got support for research and development.

Three countries classified as "centrally planned" accounted for a full 50 per cent of total world coal production. They were China, with 895mt in 1987, the USSR, 591mt, and Poland, 193mt. They received direct operating grants and investment aid.13

RSA Australia Australia China China

USA Canada Poland Colombia China Australia RSA

1.3 0.9 0.8 0.8 0.9 1.0 1.0

12.4 12.0 11.7 8.0 10.0 14.0 16.0

273 28.5 26.8 27.5 25.5 26.9 26.0

33.0 35.0 33.2 28.7 23.7 26.6 23.7

120 123 124 104 93 99 91

Origin

S%

Ash%

Volatiles %

$/tfob

Ash% X$/tfob

USA Canada Poland China USSR Australia RSA

1.0 0.8 1.0 0.8 0.9 0.6 0.9

8.1 7.2 8.0 9.8 9.5 9.0 7.0

25.3 23.1 28.5 30.5 22.0 26.6 32.1

47.4 43.3 46.0 45.0 43.5 42.0 27.0

383 312 368 441 413 377 189

Productivity in underground collieries in New South Wales rose steadilly after 1976 when saleable coal output per man per year was 2,050t. This had increased 42 per cent by 1987 to reach 2,920t. Only the USA experienced better improvements in productivity. Safety improved as well, with the fatality rate falling from 1.0 per 1,000 employees in 1971, to 0.4 in 1987.13

Steam coal prices

W. Europe Baltic ports Taiwan Phillipines W. Europe

Ash% MJ/Kg $/tfob cent/GJ Ash% X$/tfob

Australian collieries produced 182.4mt of raw coal in 1986/87, which yielded 148.7mt of saleable coal, 64 per cent or 96mt of which was exported. Total saleable coal output doubled between 1980 and 1987, due largely to the increase in opencast mining. Australia is the world's fifth producer of coal, but the premier exporter, with over twice the tonnage of South African exporters.

Internationally, it was only the Chinese producers who could match South African export price levels. However, poor infrastructure and increased local demand thwarted Chinese hopes of becoming a major exporter. A comparison of steam coal prices, ci.f. compiled by the International Coal Report, revealed the price advantage enjoyed by the South African and Chinese exporters relative to their Australian rivals.

Origin

S%

Coking coal

Eleven countries were classified as "market protected", including Belgium, France, the FRG, the UK, India, the Phillipines, Portugal and Spain. Collectively the 11 only accounted for 13 per cent of total world production.

Where available

Origin

Price in $ per gigajoule 1986

1987

1988

1.26 1.09 1.40 n.a. n.a.

1.14 n.a. 1.08 1.16 1.28

1.56 1.20 1.62 1.31 0.96

The USA was the world's second largest producer of coal, and output continued to grow by more than 20mt per annum between 1975 and 1988 when it totalled 900mt from over 1,600 collieries. Underground mines accounted for 40 per cent of total coal output, and productivity in those mines dropped by 40 per cent in the ten years after the promulgation of the Federal Mine Safety and Health Act in 1969. However, over the next decade rationalisation helped productivity climb back from

Source: ICR, 16July 1988.

5

1,440 tons per employee per year, to 4,2501. Safety also improved dramatically, and fatalities declined from 1.9/1,000 employees in 1970 to 0.36/1,000 in 1987.14

According to Reinoud Boers, writing in the COM Mining Survey, the overall safety trend for the 11 years 1977-87 was nevertheless positive. The fatality rate for all South African coal mines decreased from 1.24 per 1,000 employees in 1977, to 1.07/1,000 in 1987. The best year was 1982 when the rate was 0.63/1,000. The figures for coal mines members of the COM improved up to 1986, when the fatality rate was only 0.33/1,000, but then jumped back up to 1.58/1,000 in 1987 as a result of the gas explosion at Ermelo Mines which killed 34, and the Coalbrook handling accident which killed 12. In 1987 COM members reported 96 fatalities, up from 24 the year before (Mining Survey, No. 1/3,1988).

III. Productivity Productivity is a notoriously complex thing to measure, and comparisons are difficult to make. In coalmining, the nature of the geological formations, the depth of the mine, the degree of mechanisation, safety requirements, hours per shift, and the number of shifts per year, are only some of the variables that affect productivity.

The 1986 fatality rate, when no major accident skewed the figures, put South Africa well behind countries like Germany and the UK, but in a similar range to the USA. It must be borne in mind, however, that 60 per cent of the coal in the USA is mined in opencast mines which are inherently safer, compared with only 30 per cent in South Africa. The USA would therefore be expected to have a better safety record. By the same token, mines in the UK and Germany tend to be relatively deep, which makes their safety records all the more remarkable.

Productivity in South Africa was previously calculated for the coalmining industry as a whole, and no distinction was drawn between underground and surface mines. After 1988 a more representative set of productivity figures were prepared for collieries members of the Chamber of Mines, which accounted for 75 per cent of total underground mine output. Overall productivity was l,785t per work year, and underground productivity was 2,92It per work year, comparable to that in Australia. Surface mines recorded lower productivity because almost 40 per cent of their workforce was involved in maintaining infrastructure, rather than digging coal as such.15

Number and rate of fatal mine accidents Country

Country

t/man-month

mt/fatality

New Zealand Australia RSA USA UK China FR Germany USSR Japan S. Korea

511 474 402 367 280 140 123 71 n.a. n.a.

n.a. 12.7 3.5 12.3 3.6 0.44 n.a. 0.63 2.0 0.15

No. of employees

Fatalities

Fatalities /1.000

The Minerals Bureau has put together some figures of productivity in various countries, and compared them to mine safety rates. The second column in the table below reflects the number of tons per work month, and the third, the number of fatalities per million tons mined.

UK FR Germany RSA USA

154 600 164 437 119 734 90070

27 43 66 57

0.17 0.26 0.55 0.63

Source: R. Boers in Mining Survey, No. 1/3,1988.

Mining activities in Australia, the USA, and South Africa are more similar and more hence comparable to each other, than to those of the UK and Germany which could form a group on their own. In the former group output is still expanding, geological conditions are favourable, mines are relatively shallow, and the "room and pillar", and "pillar extraction" methods are widely used. These mines are more productive but also more dangerous than mines in Europe. In the latter a process of rationalisation is accompanying the gradual closing down of the industry which is no longer viable because of the costs associated with the depth and complexity of the mining operations. Productivity in Europe is generally lower, and most mines use the safer "longwall method".

Source: MB Bulletin, Mar. 1990.

IV. Occupational safety and health Safety figures for South African coal mines were affected by large accidents in 1983,1985 and 1987 when methane gas explosions and a mudrush resulted in extensive loss of life. The three gas explosions alone killed 135 miners.

An analysis of the major causes of fatal accidents on underground coal mines, expressed as a percentage of all underground facilities, in selected countries, revealed the following: 6

Cause

FRO 1980

UK 1981

USA RSA 1982-84 1983

Falls of ground Haulage and transport Movement of personnel Machinery Falling objects Explosives Explosives and firedamp/ dust Underground combustion Electricity Other causes

23.9 33.3 14 J 7.7 8.5 1.2

22 64 5.5 2.7 2.7 -

43.6 18.2 2.4 5.2 2.4 1.5

29.1 22.6 3.1 6.5 4.4 1.6

1.6 6.8

2.7

7.2 10.8 7.2 1.5

24.5

Increases in the price of coal compensated for some of the increase in wages. The average pit head price of domestic coal rose 92 per cent in that period, and export prices (f.o.b.) were 73 per cent better. The following tables set out levels of employment and wages. Skilled employment and wages Year

2.3 5.2

1984 1985 1986 1987 1988 1989

Source: Dr. H. Wagner.

As expected, the deeper European mines had many more fatalities associated with haulage and transport than the shallower mines in the USA and RSA, and the longwall methods of mining they generally employed appeared to be less susceptible to falls of ground than the bord and pillar, and pillar extraction methods.

No. ofempl. 8154 8 695 8 768 8 293 8 378 8 520

Tot.wages (Rm)

Av.wage (R.pa)

177.7 209.2 244.2 265.6 301.5 365.1

21799 24 064 27 838 32023 35 991 42 855

Unskilled employment and wages Year

No. of empl.

Tot.wages (Rm)

The rate of reportable injuries per thousand employees, according to Mr. Boers, was 21.3/1,000 for all South African coal mines in 1977, and 23.59/1,000 for coal mines members of the COM. This improved considerably to 4.8/1,000 by 1987 for all coal mines and 6.53 for Chamber mines.

1984 1985 1986 1987 1988 1989

62236 63156 61135 55 936 50697 49023

259.8 305.8 353.5 370.8 406.6 466.7

The safety record of coal mines compared well with that for other branches of mining in South Africa. In 1986 gold mines had a fatality rate of 1.28/1,000, compared with 0.33/1,000 for COM coal mines, and 0.37/1,000 for "other" mines. The injury rate on gold mines in that year was 21.20/1,000, compared with 6.79/1,000 on coal and 9.22/1,000 on other mines.14

According to the NUM, the average monthly wage paid to coalminers in 1989 in various countries was as follows:

V.

Employment and wages

Av.wage (R.pa) 4174 4 842 5 782 6 628 8021 9 518

Country

Av. wage/month

Tons/man-month Rands/ton

Australia USA FR Germany UK RSA

R7547 R6 095 R5 350 R4 059 R1204

474 367 123 280 402

15.92 16.60 43.49 14.49 2.99

Source: NUM and own calculations.

The employment of unskilled workers on coal mines declined consistently in the second half of the 1980s, while that of skilled workers increased slightly. This reflected the increasing use of machinery and the growth of opencast mining. From 1984 to 1989 the number of unskilled mineworkers fell 21.2 per cent, while the number of skilled workers rose 4.5 per cent, and coal output increased by 9.2 per cent, according to the COM (FM, 20 July 1990).

The 1990 wage settlement between the NUM and the COM established increases above the rate of inflation for all grades of unskilled worker, and brought the lowest wage in the industry to the R356pm paid by Lonrho. The new range of wages, from grade one to grade eight, with their percentage increases, was as follows: 1990 mine wages

The average wages paid to skilled workers increased 96.6 per cent between 1984 and 1989, and those received by unskilled workers advanced 128 per cent. When related to the amount of coal produced by each worker, the wages paid to unskilled miners in 1989 worked out at R2.64 per ton, and those paid to the skilled at R2.07/t. These rates per ton represented improvements of 65 per cent and 88 per cent respectively when compared with 1984 levels, suggesting that wages had grown more than productivity. 7

Mine

New range

Rand increase

% increase

Douglas Amcoal JCICoal Genmin Coal Dumacol GFCoal

573-1314 471-1229 443-1227 433-1302 400-1153 379-1248

78-178 74-190 66-160 93-176 94-172 55-158

15.7-15.6 18.6-17.8 17.5-15.0 30.8-15.6 30.7-17.5 17.0-14.5

8 Financial Mail, 24 Feb. 1989.

Notes

9 1

South Africa's Mineral Industry, 1989.

Minerals Bureau Bulletin, July 1990.

10

Mining Magazine, May 1989.

11

US Department of Commerce: Survey ofgovernment assistance to the world's hard coal industries.

2 Ibid., pp. 44-45. 3

Ibid., p. 45.

4

Confidential Stockbrokers Report A.

12

SA Mining, Dec. 1988.

Confidential Stockbrokers Report B.

13

Dr. H. Wagner: An international comparison ofunderground coal mining operations.

14

Stockbrokers Report A, op. cit.

5

6 Ibid., pp. 67-69. 7

Ibid., p. 74.

8

Chapter 2 Export markets for South African coal

I.

These companies have been highly profitable in the late 1980s. Amcoal saw earnings rise by 54 per cent in 1990, while the coal operations of Gencor rose 90 per cent between 1989 and 1990, despite a drop in sales to Japan, traditionally its most important customer.

Introduction

World coal output reached a new peak in 1989:3.65 billion tons, an increase of 114 mt over the 1988 total. The most noticeable increase came from China, up 78 mt to 998 mt.1 South Africa exported a total of 46.7 mt of coal in 1989, 3.7 mt more than the previous year. This total, however, masked a sharp decline of 69 per cent in the volume of coking coal exported, while steam coal exports rose 20 per cent to a total of 41.8 mt. In 1990 exports climbed again to a total of 49.4mt.2 The world coal industry is a highly competitive one, with the top 20 companies accounting for around 50 per cent of world supply. No one country occupies a dominant position, as South Africa does in the gold, platinum and ferro-alloy markets, and unlike commodities like diamonds and oil, no cartel exists. South Africa is none the less well represented in the international coal market, mainly by the Anglo-American Corporation's coal division, Amcoal, and Gencor. These two companies rank amongst the most profitable worldwide, with over 30 per cent profit margins on coal operations. Gencor had an operating profit per tonne of $ 1.82 in 1990, while Barlows boasted $4.10 per tonne. They also enjoyed high labour productivity, with a 24 per cent increase between 1985 and 1988.

It was in the late 1970s that South Africa became one of the leading coal exporters. With total exports of 44 million tons in 1988, South Africa was the world's third largest coal exporter, holding 12 per cent of the world market, after Australia with 100 million tons and the United States with 86.1 million tons. In 1989 South African exports totalled 47mt, while the USA shipped 91mt and Australia 98mt. South Africa's market share remained virtually the same.4 South Africa occupied the second position on the world market for steam coal in 1987 and 1988. As can be seen in table 2.1, South African coal exports, of which steam coal formed the major part, increased considerably from 1980 to 1986, before slowing somewhat. However, good growth was recorded in 1989. Table 2.1.

Ranked by the size of exports, Amcoal filled sixth place in the world rankings in 1988, and moved up to fifth place in 1990. Gencor occupied the ninth spot in both those years. Top of the list were BHP (Australian), Royal Dutch/Shell Group, Du Pont and BP.

South African coal exports in millions of tons 1980

1985

1986

1987

1988

1989

1990

Anthracite 0.1 Coking coal 3.4 Steam coal 25.6 Total 29.1

0.3 5.1 39.5 44.9

0.3 5.9 40.3 45.5

0.2 4.8 37.4 42.4

0.2 4.0 38.4 42.6

1.9 3.3 41.8 47.0

n.a. 3.5 45.8 49.4

Sources: South Africa Minerals Bureau; Simpson, Spence, Young Research Ltd.

II. Exports of South African coal

South African coal exports as a percentage of total exports have risen from 2 per cent of total exports in 1978 to 8.6 per cent in 1985 and to 10 per cent in 1986. In 1988 the coal industry earned a total of $2.39 billion, an increase of 19 per cent on the year before. Export earnings were $1.13 billion. This made it the second largest source of foreign exchange after gold. The value of coal exports in 1989 was US$1.36 billion; about half the increased earnings were due to currency movements. Exports were worth R3.8bn in 1990.

Exports as a percentage of sales for Amcoal in 1988 were 21.7 per cent, and 22.2 per cent in 1990. Gencor had figures of 21.9 per cent and 27.8 per cent respectively.3 Exports are of course particularly lucrative thanks to the low rand/dollar exchange rate which increases the rand receipts of overseas sales. Hence some 25 per cent of total coal output was exported in 1988, and yet it accounted for 60 per cent of the industry's earnings. In 1989 export earnings actually surpassed revenue from local sales, although the export tonnage was again only some 25 per cent of the total. This exchange rate bonus is expected to prevail, and possibly be enhanced, as inflation differentials affect the value of the rand.

The traditional market for South African coal exports were the countries of the European Community, which generally took over 50 per cent of the export volume, but as the embargo on coal became more widespread South African producers sought to diversify their 9

Amcoal has the largest quota allocation at RBCT with 9.6 mt per annum, followed by Trans-Natal and Rand Mines with 9.3 mt each. Shell has an allocation of 5.5 mt, and JCI 3.6 mt. Total is entitled to 2.5 mt per annum, Kangra to 1.8 mt, Duiker 1.4 mt and Goldfields 1.0 mt. The port of Durban, 250 kilometres south of Richards Bay, is capable of handling another 4.4 mt per annum. The Durban Coal Terminal Company handled about 3 mt in 1990.

markets in order to maintain and even expand their level of export sales. In 1985 about 61 per cent of South Africa's coal exports went to Europe, 19 per cent to Japan and 11 per cent to the rest of Asia. By 1989 only 45 per cent was going to Europe, 12 per cent to Japan, while the rest of Asia had increased its purchases threefold to 38 per cent. The present economic recession means that South African domestic coal consumption is unlikely to grow for some years, so export sales have become even more crucial to the profitability of the coal industry. Virtually all electricity supplied in South Africa is coal-generated, consuming 50 per cent of domestic coal supplies. Industry, including synthetic fuels, gas, chemicals and agriculture, accounts for another 40 per cent of local sales.

The Mozambican port of Maputo is also capable of handling coal exports and the Matola Exporters Committee (MEC) has recently completed a four-year refurbishment of the export facilities at a cost of $1.7 million. However, export volumes remain limited because of the poor security situation in the country that results in the railway line frequently being attacked by the Renamo rebel movement. An additional problem is the collapse of one stacker/reclaimer. Arrangements are being made to have this repaired.

However, the stagnation in the South African economy, exacerbated by foreign economic sanctions, has led to a sharp downturn in electricity consumption and Eskom, the parastatal utility company, has been forced to close or mothball 13 power stations.

The members of the Matola Exporters Committee include Trans-Natal, Concor, Messina and the Swaziland coal company Emaswati. Most of the coal exported through Maputu comes from Trans-Natal and Emaswati. It is estimated that Maputo handles maybe 400,0001 per annum from the MEC, and 500,0001 from other sources at present. Up to 1 mt per annum could be sustained if the security situation improved and the harbour was dredged to allow access to larger vessels.4

Export production was allocated by the Government through a system of quotas according to region or reef in terms of national development priorities. Policy considerations also influenced the allocation of export permits, however, as in the early 1970s when foreign investors Shell, BP and Total were all granted permits in exchange for their commitment to supply oil to South Africa. They all entered into joint ventures with local mining houses and took shares in the Richards Bay Coal Terminal (RBCT) through which the bulk of South Africa's coal exports flow. BP has since sold its mineral interests world-wide and is no longer involved. This quota system has since been scrapped, and coal exports deregulated, although access to port facilities remains a limitation.

III. International market trends The 1980s have been challenging years for the South African coal industry. The rapid growth in both the volume and the value of exports has taken place in the context of three factors which threatened its growth. First, increasing sanctions targeted South African coal because it was a bulk commodity that could not easily be smuggled or disguised and for which ready alternative supplies existed. Secondly, South African producers faced greater competition from other coal-exporting nations. The development of new mines in China, Colombia and Brazil, amongst others, had resulted in an oversupply of steam coal on the world market and at certain times had driven the price down to levels that were unprofitable for many producers. Thirdly, the price of oil dropped during these years and made it a viable alternative to coal for some consumers.

The coal industry, in close co-operation with the South African Government, has developed an efficient export system with a specially built railway line running from the Transvaal and Natal coalfields to the Indian Ocean port of Richards Bay, where the RBCT presently handles 45 mt per annum and is undergoing a $122 million modernisation programme to expand capacity to 53 mt per annum. Depending on market conditions, the RBCT could be exporting at full capacity by 1995. However, the price of coal on world markets would have to increase considerably to justify this and any further expansions. The present increase in capacity requires an increase in price of $8/t to pay for it, and the projected target of 80mtfyear would demand a further $6/t to pay for the investment. Mr. Michael Hawarden spelt this out clearly at the CoalTrans 90 conference in Brussels when he gave details of the cost of the greenfields developments that would be required if the country was to export more than 53 mt pa. The capital costs of new mine developments, and the necessary additions to RBCT, would make the planned targets financially unviable.

After a particularly strong year in 1986, coal exporters in general and South African producers in particular faced a shrinking market and falling prices. Oversupply, warm weather in Europe and cheaper oil combined to create very difficult market conditions in 1987. The South African suppliers feared that the additional political stigma that attached to their product would further weaken their competitive position and so they started a price war that helped drive prices down to a level where most of their competitors were having to 10

Table 2.2.

sell at less than the costs of production. Some South African coal was even sold at $20 per ton, and most contracts were settled at around $27 per ton, whereas American producers, for example, required a price of $35 per ton to break even.

South African steam coal exports by country in millions of tons 1982 1983 1984 1985 1986 1987 1988 1990

As a result of this drastic action South African exporters were able to maintain volumes only slightly lower than before despite a smaller world market and the loss of some 10 mt in sales to France, Denmark and the United States, all of which imposed bans on South African coal imports after 1986. In volume terms South African coal exports fell only by 3 mt, but the difficult market conditions were reflected in the 25 per cent fall in export earnings. Prices recovered in 1988 but South African exporters were forced to maintain a "sanctions discount" of some $5 per ton.

Belgium Denmark France Germany Greece Ireland Italy Luxembourg Netherlands Portugal Spain UK

3.0 3.1 5.0 13 3.6 0.1 0.2 0.7 0.1

1.9 19 3.9 2.4 0.1 3.9 0.1 0.3 1.1 0.1

1.8 17 5.5 2.3 0.1 6.2 0.1 0.7 0.1 1.6 0.3

2.1 3.5 6.4 3.2 0.2 0.1 6.6 0.1 0.8 0.1 2.2 0.7

2.1 17 1.5 4.1 0.3 5.7 0.1 1.4 0.4 4.1 0.3

2.4 0.8 17 0.7 6.1 0.2 1.7 0.9 4.4 0.2

The ARA price for South African coal stayed in the $39.50-$41.00 range for 5,900 kcal/kg material for most of 1989. This was certainly a substantial improvement on the $26.50 received in mid-1987 at the height of the price war.' / The uninspiring price performance of South African coal reflected the warm winter of 1988-89 in Europe and a switch by industry to other fuels such as cheaper oil. It was also a sign of greater competition from other producers, particularly Colombia, and of the lengths to which South African exporters had to go in order to overcome the politically motivated reluctance of certain customers.

4.5 0.86 4.5 0.9 0.06 4.3 0.13 1.3 2.08 4.6 0.35

18.1 16.7 21.4 26.0 22.7 20.1 . - 0.1 0.2 Austria - 0.1 0.1 0.3 0.4 Switzerland 0.1 Turkey - 0.2 0.6 2.8 3.1 3.1 4.1 3.7 3.1 Japan Hong Kong 0.3 1.5 1.7 2.2 2.5 2.6 South Korea 1.2 1.1 1.5 3.7 5.7 5.4 0.6 0.9 0.9 1.0 2.0 2.5 Taiwan

19.0 23.8 0.4 0.4 1.2 0.8

Total EC

The Financial Mail of 12 January 1990 quoted an unnamed coal industry executive as saying "In the markets where South African coal is subject to sanctions or threats, the other exporters are scoring off us. We're getting dollar increases of about 5 per cent whereas the Colombians are getting increases of up to 10 per cent and the Australians are getting increases of about 7 per cent". Another industry source pointed out that "... the South African discount is not reducing despite the firmer market conditions".

2.3 0.9 17 1.0 0.1 4.3 0.1 1.5 1.4 4.4 0.3

2.2 4.6 n.a. 4.3

1.6 4.5 6.0 5.4

Tot. Far East

4.9

6.6

7.2 11.0 13.9 13.6

n.a. 17.5

Israel

0.8

14

1.5

2.2

2.3

United States 0.5

0.7

0.6

0.8

0.9

-

-

0.4

1.5

3.2

2.4

-0.1

0.9

6.0

Others

2.3

2.0

Total exports 24.8 27.9 34.0 42.5 40.3 37.8

2.2 0.2

40.0 45.8

Sources: IEA Secretariat and US Energy Information Administration, Simpson, Spence and Young Research Ltd.

The South African exporters also have a reputation for reliability, a very important characteristic in dealing with countries like Japan and Italy whose large economies are heavily dependent on imported sources of energy. In 1988 South African exporters were able to take advantage of production difficulties in Brazil and China and labour disputes in Australia, all of which resulted in broken contracts. The huge El Cerrejon mine in Colombia, one of South Africa's main competitors, was hit by two hurricanes and labour unrest, further strengthening South Africa's position in the world market.

Nevertheless, South African coal exports grew strongly in 1989. Coal exports increased 8.8 per cent, although total coal production was down by 4 per cent. The higher exports more than made up for the 17.5 per cent fall in domestic consumption.

A look at the statistics of South African coal exports since sanctions were stepped up in 1986 reveals an interesting combination of preserved, and even expanded, sales to traditional customers, and the penetration of new markets, particularly in South-East Asia. Although volumes and values fluctuated in this period, the moves mostly reflected world market trends rather than specific reactions to South African coal. As a result, the volume of coal exports held up firmly against the increase in opposition to the policy of apartheid, but a certain "sanctions cost" has been paid in price terms relative to other producers.

IV. South African coal exports: By country South African coal mines are amongst the cheapest in the world and they can generally deliver their coal to Amsterdam, Rotterdam and Antwerp (the so-called ARA price basis) for $13-14 less than their American competitors, and between $6 and $16 more cheaply than Australian producers. In the third quarter of 1990, South African coal imported into the EC was 4 per cent cheaper than its nearest rival, Colombia, and 18 per cent less expensive than Polish coal which topped the price list.

This study has concentrated on the years 1987 to 1989 because that was the period in which sanctions pressures Were greatest, and when world demand was 11

Japanese coal imports from South Africa are significant, not only for their size, but for their type, in that 65 per cent of the 1989 imports comprised coking coal destined for the steel industry, with only some 30 per cent made up of steam coal for electricity generation. This reverses the situation in most of South Africa's other export markets where it is primarily a supplier of steam coal.

relatively slack and viable alternatives to South African coal were available. The continued upward trend in South African coal exports during this period suggests rather strongly that the efficacy of the coal embargo was limited. Table 23.

South African coking coal exports by country in millions of tons

Italy imported $214 million worth of South African coal in 1986 (5.7 million metric tonnes) and $171 million in 1987 equivalent to 6 mt, as a result of the lower world prices prevailing at that time. In 1988 demand for South African coal started to wane with imports amounting to only 4.3 mt. Imports in 1989 rose slightly to 4.9 mt, but in 1990 they fell back 11 per cent to 4.3 mt.6

1982 1983 1984 1985 1986 1987 1988 1990 France

-

0.2

0.1

Turkey

-

-

-

0.2

0.1

3.3

3.1

4.6

4.6

5.2

4.2

0.3

0.6

0.6

5.1

5.9

4.8

Japan

-

-

-

Taiwan

S.Korea

0.2

-

0.1

Total

3.5

3.3

4.8

4.0

3.3

4.0

3.5

Italy is highly dependent on imported sources of energy and has chosen to increase the proportion of its energy derived from coal. At the same time the national energy plan calls for the maximum diversity of sources, to prevent an overdependence on any one source and to ensure the continuity of supplies. Most of the imports of South African coal are handled by the state electricity utility company ENEL, which is facing increasing pressure from trade unions and anti-apartheid groups to cut the level of coal supplied by South Africa.

Sources: IEA Secretariat and US Energy Information Administration.

Japan had always been the largest customer for South African coal but a combination of political and economic pressures obliged Japan to reduce the relative proportion of South African coal in its total import. The value of coal imported from South Africa fell by 22 per cent between 1986 and 1987 due to the price war and oversupply, while the volume dropped some 16 per cent, and this trend continued with an 11.4 per cent decline in volume between 1988 and 1989. According to the Japanese Ministry of Finance, South Africa exported 3,613,841 t of coking coal to Japan in 1989, 7.9 per cent less than in 1988. The level of thermal coal exports to Japan fell further (20.3 per cent) to 1,562,093 t and anthracite sales weakened by 2.9 per cent to 440,7501.

South Korea is a country which does not often feature in international statistical tables and its trade relations with South Africa are particularly obscure. South Korea maintains no diplomatic ties with South Africa but it has not imposed any restrictions on private sector dealings between the two countries. As a rapidly growing newly industrialised country with a large appetite for raw materials, it is a rather obvious candidate for South African mineral and metal exports. It should perhaps not be a surprise therefore to find that it occupies the number three slot amongst importers of South African coal, after Japan and Italy. In fact, the country uses mainly South African and Chinese coal with only small amounts imported from Australia.

In 1990 Japan imported 6 per cent less coking coal than in 1989,3.3 mt, and 7.5 per cent less steam coal, at 1.4 mt. Anthracite imports from South Africa fell a full 50 per cent to 202,6801. The fact that Japan emerged as South Africa's number one trading partner in 1988 embarrassed the Ministry of Trade and Industry sufficiently for it to advise Japanese companies to reduce the level of trade with South Africa wherever possible. Added to this was the controversial trade surplus with the United States and the decline of the dollar against the yen which encouraged it to buy American coal which had become relatively cheap as well. Coal imports from the United States grew by 36.8 per cent between 1988 and 1989 in volume terms, those from Australia by 25.3 per cent and from Canada by 18.9 per cent. This trend has accelerated in the financial year 1989-90 with imports of South African steam coal dropping 40 per cent on the same period the year before, while the imports from the United States leaped almost ninefold.5

Imports of South African coal grew strongly up to 1986 and were valued at $204 million that year, representing an increase of 80 per cent over the average for 1983-85. The volume of imports in 1986 equalled 2.1 mt and this grew to 2.4 mt in 1987,53 per cent more than the average in 1983-85 according to a Commonwealth Group of Experts. Amongst the customers for South African coal are Tongyang Cement, Samsung Co., Lucky Goldstar and Sunkyong Ltd.7 Figures extracted from the publications of the International Energy Agency and the US Energy Information Administration (on which table 2.3 is based) suggest a far higher level of imports of South African coal than the Commonwealth Group of Experts found. Total imports of South African coal probably amounted to some 6 mt in 1989 and 1990.

Japanese sanctions against South Africa were always "quietly abused", according to the ICR (22 February 1991), and " . . . their demise has been a hushed affair. The Ministry of International Trade and Industry has not exactly scrapped the sanctions; it has simply let companies know that they will not be applied."

Spain imported $146 million worth of South African coal in 1986 (3.9 mt) and $132 million in 1987 (equivalent to 4.4 mt). The 1986 value represented an increase of 104 12

coal from South Africa had already reached 3.7 mt, an increase of 49 per cent on the same period in 1989. Total 1990 imports of all types of coal from South Africa were 4.6 mt.

per cent on the average for 1983-85 and of 142 per cent in volume terms. In 1988 the volume was up slightly at 4,453,0001 and then climbed again to 4,986,0001 in 1989 due to a significant increase in coal-fired electricity generation. Volumes fell 6 per cent in 1990, to 4.6 mt.8

As in the case of Spain, this increase is largely attributed to an increase in coal-based electricity generation. A certain amount may also be re-exported to other countries.

Spanish imports of South African coal have increased fivefold in volume during the period 1983-90 and Spain's dependence on South African supplies has grown from only 5.3 per cent in 1981 to 51 per cent in 1988 and a full 76 per cent by 1990, making South Africa the number one supplier, and Spain the number one customer in Europe. Most of these imports are handled by Carboex, a state corporation, and another Spanish company, El Cano, handles the resale of 350,000 t of South African coal through Rotterdam to third parties.9 Other Spanish customers include Cementos del Atlantico, Cementos del Mar and Cementos del Mallorca who bought a total of 200,000 t in 1989 delivered by trader Marc Rich at the ports of Alcanar and Huelva. Asland Cement, Spain's largest cement company, is also a customer.10

In 1988 it was discovered that Belgium had been supplying South African coal to France in the guise of Australian coal, as France had placed an embargo on imports of South African coal.12 Taiwan spent $77 million on just over 2 mt of South African coal in 1986 and $76 million on 2.4 mt in 1987. Imports of South African coal reached 4.3 mt in 1988. In 1989 imports of South African coal stood at 4.9 mt, and 5.4 mt in 1990, an increase of 11 per cent. South Africa is the largest single supplier, with a market share of 39 per cent, followed by the USA with 28 per cent, and Australia with 26 per cent.13

The Federal Republic of Germany has steadily reduced the amount of coal it purchases from South Africa. The $172 million that it spent on 4 mt of South African coal in 1986 was an increase of 55 per cent on the average for 1983-85, but then imports dipped 46 per cent between 1986 and 1987 to $94 million, equivalent to 2.6 mt. In 1988 the Federal Republic of Germany bought 2.7 mt from South Africa but this lower level of coal imported from South Africa, compared with 1985-86, was in line with a general decrease in coal imports rather than a specific restriction of South African coal imported.

Hong Kong bought 2.5 mt of South African coal in 1986 for $94 million and another 2.5 mt in 1987 for only $74 million. The 1986 value represented an increase of 28 per cent on average for 1983-85. The IEA puts 1988 imports of South African coal at 4.6 mt, an increase of some 43 per cent on their figures. In 1989 coal imports from South Africa increased by over 21 per cent, according to the Hong Kong Census Department, which would put the total at around 5.5 mt. Most published statistics, however, put the import at around 4.8 mt in 1989 and 4.5 mt in 1990. One of South Africa's principal customers was Hong Kong Electric, which signed a contract with Stinnes (a supply company) to provide 1 mt of South African and Indonesian coal. This was the first of the 1990 contracts struck in Asia and reflected the weaker prices for South African coal, namely $41.50 for 7,000 kcal/kg GAR material and $29 f.o.b for 6,000 kcal/kg NAR. The South African coal came from Rand Mines and Gencor.14

The Verein Deutscher Kohlenimporteure puts 1989 imports of South African steam coal at 2.3 mt, a decline of 13.7 per cent over the previous year, but South Africa remained the largest single supplier, followed by Poland with just over 2 mt and then the EEC with 0.7 mt. Steam coal imports from South Africa leapt 93 per cent in 1990, to 4.5 mt. The difficulties now being experienced by the Polish coalmining industry threaten to cut their exports and this may well strengthen South Africa's share of the German market. The 31,0001 of anthracite imported in 1989 and 1990 was the same as 1988, according to the Statistisches Bundesampt.11

Israel imported 2.2 mt of coal from South Africa in 1986 at a cost of $95 million. In 1987 the volume dropped to 1.9 mt according to the Miners International Federation15 but only to 2.1 mt according to analysts at brokers Mathison and Hollidge in Johannesburg. The 1986 value was 32 per cent higher than the average for 1983-85.

Belgium/Luxembourg imported just over 2 mt of South African coal in 1986, worth $97 million. In 1987 the figures were 2.1 mt worth $89 million. This was 11 per cent lower in value terms than the average for 1983-85. According to the IEA, Belgium imported 2.4 mt in 1987 and 2.3 mt in 1988, while Luxembourg took 0.2 mt and 0.1 mt in those years (see table 2.2). According to the Eurostat Rapid Report No. 5, Belgium imported 3.1 mt of South African coal in 1989 and Luxembourg another 142,0001, which gives a total of 3,267,0001, an increase of 33 per cent on their figures. In the 11 months to November 1990, however, the level of imports of steam

The value of the South African coal import in 1987 was $71 million. In 1989 Israel imported a total of 3.7 mt from all sources, up from 3.3 mt in 1988, and South Africa accounted for 2.3 mt of the 1988 and 2.2 mt of the 1989 import, by far the major share. Second was Colombia with 592,0001, followed by the United States with 442,000 t and Australia with 396,000 t, down dramatically on its 1988 share of 639,0001. This trend remained the same in 1990. Although the South African component was down slightly to 2.2 mt, it still lead the USA, Australia and Colombia.16 13

apparently the only country that can handle the specialsized anthracite Ankara requires. However, the handling at Durban and Maputo results in too many fines (unusable coal) and this needs to be rectified if price penalties are to be avoided.21

Portugal's imports of coal from South Africa in 1987 leapt a massive 1,021 per cent in value compared with the average for 1983-85. The increase in volume terms was even more dramatic at 1,370 per cent. The amounts concerned, however, were still rather small and the tonnage in 1987 came to only 779,000 t, up from 544,000 t the year before. In 1988 this climbed to 1.6 mt and in 1989 to 1.8 mt.17 The International Coal Report estimates that South Africa supplies 40 per cent of the coal burned by Electricidade de Portugal (EdP) which makes it the second biggest supplier after the United States with 46 per cent. In 1990 the total was 2 mt, about half of which went to EdP, which has already contracted to buy 1 mt from South Africa in 1991.

Turkey has developed wider trade relations with South Africa in recent years, partly because its economy has strengthened and demanded more raw material inputs. One advantage to South African companies of this relationship is the potential for the re-export to Europe of South African products under Turkish labels. Greece increased its purchases of South African coal from $5 million in 1986 to $13 million in 1987, a jump of 132 per cent. The volume in 1987 was some 711,000 t. This grew to 901,0001 in 1988 before dropping again to 593,000 t in 1989. In 1990 imports from South Africa climbed 31 per cent to 925 OOOt.22

The Netherlands imported 1.5 mt of South African coal worth $62 million in 1986 and 1.7 mt worth $59 million in 1987. In 1988 the volume declined to 1.6 mt and in 1989 to 1.1 mt. In the main category of "Other coal" the volume fell from 1,272,0001 in 1988 to 834,000 t in 1989, a 34.4 per cent decline. Figures for the first 11 months of 1990 show steam coal imports from South Africa up by 14 per cent at 934,0001. Total coal imports from South Africa for 1990 were up 23 per cent at 1.4 mt. The statistics also list small amounts imported from Swaziland and Mozambique. These are almost certainly of South African origin.18

China is a rather unusual customer for South African coal exports for a number of reasons. First, it is often cited as a competitor in the world market and indeed does export its own coal, some 15 mt in 1989. Secondly, China would generally be regarded as adopting a firm anti-apartheid policy. However, it seems that increased domestic demand for coal, coupled with transport, mechanical and labour problems, often prevent the Chinese from fulfilling production targets and meeting local and export orders. This opens the door for imports of some 6 mt per annum, including some from South Africa.

In the Netherlands South African coal is mixed with coal of other origins and then sold to third parties as Dutch Blend. The UK was one country which imported large quantities (1.1 mt) of South African coal in this way, reflecting it in the trade statistics as an import from the Netherlands rather than South Africa.19

These imports of South African coal are by no means a mistake or a flash in the pan, since the centrally planned Chinese economy involves government certification at almost every level, in this case by the China Coal Import Export Corporation.

France imported 1.5 mt of coal from South Africa in 1986 according to the MIF, but the Commonwealth Group of Experts20 concluded that France had bought over 2 mt. Most estimates agree, however, that the volume of imports in 1987 had declined to around 777,000 t. This was to be expected after France banned all new contracts for South African coal. However, the volumes have crept up in the official statistics to 864,0001 in 1988, 948,0001 in 1989 and 864 0001 in 1990. This does not take account of South African coal mistakenly or fraudulently imported under the "label" of another country, such as the 1 mt of South African coal fraudulently labelled as coal of Australian origin.

The International Coal Report of 23 March 1990 reported that a seventh shipment of South African coal had recently been unloaded at Huangpu. They described the situation thus: "The opposition to South African imports seems to be more a convenience rather than a formal anti-apartheid policy; iron ore imports have been flowing for years" (page 3). Another new market opening up to South African coal exporters is Eastern Europe. Romania has contracted to purchase 600,0001 of steam coal at a CIF price of around US$45. This was relatively high, and rather surprising, as cheaper and better Soviet coal was readily available.23

Turkey spent $22 million on imports of South African coal in 1986 and $35 million in 1987, 359 per cent more than the average for 1983-85. The IEA figure for South African coal imports in 1987 is 0.6 mt and in 1988 1.2 mt (see table 2.2). Belco was the company that acted as coal-purchasing agent for the city of Ankara. In 1989 it purchased some 1 mt of South African coal for the Ankara City Council, shipped out of Durban and Maputo, and it has plans to expand its purchases to cover supplies to other cities for home heating. Ankara's air pollution has improved since it switched from domestic lignite to South African supplies of semi-anthracite, which has a lower sulphur content. South Africa is

V.

Projected market trends

The following import projections are based on two influential publications, namely Coal Information 1989 published by the International Energy Agency, and Steam Coal (1988-95) by Drewry, which was used for the non-OECD countries. 14

Table 2.5.

The projections take into account the, existing capacity of power stations and industries as well as the plans for the construction of power stations. Table 2.4.

OECD countries: Forecast of total steam coal imports in millions of tons, 1990-95, compared with the actual 1988 imports 1988

1990

1995

Belgium Denmark France Germany, Fed. Rep. of Greece Ireland Italy Luxembourg Netherlands Portugal Spain United Kingdom

3.4 8.4 3.4 6.4 1.5 3.5 9.4 0.2 9.9 2.4 4.5 4.2

7.8 12.8 6.4 8.6 1.6 3.5 10.9 0.2 10.4 2.9 5.0 9.9

7.2 13.2 7.1 11.0 1.8 3.8 20.0 0.2 13.6 4.4 6.6 14.1

Austria Switzerland Turkey

1.4 0.4 1.0

1.4 0.2 1.1

1.7 0.4 4.4

Japan

25.3

27.1

37.0

Total imports

85.3

109.8

146.5

Hong Kong South Korea Taiwan Israel Total imports

Non-OECD countries: Forecast of the steam coal imports in millions of tons, 1990-92, compared with the actual 1988 imports 1988

1990

1992

8.9 14.0 12.5

10.7 14.3 10.7

12.5 16.0 13.1

3.4

4.5

5.4

40.2

47.0

38.8

Source: IEA/Drewry Shipping Consultants

Table 2.6.

Non-OECD countries: Forecast of the South African steam coal imports in millions of tons, 1990-92, compared with the actual South African imports in 1987 and 1988 1987

1988

1992

2.6 5.4 2.5

4.6 6.114 4.3

5.6 6.3 3.6"

6.5 7.0 4.5

Israel

2.0

2.3

3.0

3.7

12.5

17.3

18.5

21.7

Source: IEA/Drewry Shipping Consultants Ltd.

15

1990

Hong Kong South Korea Taiwan Total imports

Sources: IEA/OECD Coal Statistics, IEA/OECD Energy Balances and IEA Secretariat projections.24

Ltd 25

9 ICR, 25 Sep. 1989.

Notes

10 ibid., 9 Feb. 1989. Statistics and information have been drawn from a number of published sources including the national trade figures of countries reporting to the International Trade Centre run jointly by UNCTAD and GATT. However, statistics for 1988 had not yet been published by the ITC because of a change in the classification system. There are also certain countries which do not report to the ITC but whose imports of South African coal are significant to this study. The figures for 1988 and 1989 contained in this report have therefore been extracted from the International Energy Association, industry journals, national trade data and Eurostat, the statistical service of the European Community. Although they may not be entirely comparable, they have been cited in order to complete the general survey of the present state of South African coal exports. 1 2 3

4

» ICR Coal Statistics Monthly, 1990: 3; 16.3.90. 12

De Morgen (Belg.), 1,4,5 Oct. 1988; 20 Jan. 1989; Le Monde, 8,9 Oct., 22 Nov. 1988.

13

ICR, 3 Nov. 1989. Coal Monitor No. 7,1991.

14

ICR, 25 Sep. 1989.

15

Put out thefiresof apartheid, ICFTU.

16

Israel National Coal Supply Company; ICR, 12 Jan. 1990; 5 Feb. 1991.

17

Eurostat Rapid Report No. 5,1990.

18

ICR Monthly Statistics No. 3,1990; ICR Mar. 1991; Eurostat Rapid Report No. 5.

19

ICR monthly statistics.

International Coal Report (ICR), 29 June 1990.

20

The sanctions report, Penguin, 1989.

SA Minerals Bureau; ICR, 22 Feb. 1991.

21

ICR, 23 Feb. 1990.

Sheffield Energy and Resources Information Services: Coal Companies World-wide, 1989; ibid 1990.

22

Eurostat Rapid Report No. 5,1990.

23

ICR, 1 June 1990 and 15 June 1990.

24

These projections are obtained through annual submissions from member countries to the IEA Standing Group on Long-Term Cooperation. The country submissions include national projections on energy trends and descriptions of energy policies.

25

The 1988 figures originate from the International Energy Agency; the 1990-92 projections originate from Drewry.

ICR, 12 Jan. 1989; SA Minerals Bureau 1990.

5 ICR, 3 Nov. 1989. 6

Eurostat Monthly Energy Statistics, Nov. 1989; Eurostat Rapid Report - Energy and Industry 1990, No. 5.

7

ICR, 23 Feb. 1990.

8

Eurostat Rapid Report No. 5.

16

Chapter 3 Policies

I. 1.1.

ernment to require Danish companies to end all South African coal imports by 1990.

Sanctions measures adopted against South African coal

Three years later, on 6 May 1986, the Folketing adopted the "Act prohibiting import of coal from the Republic of South Africa and Namibia".9

Countries of the European Community

In July 1986 the European Community (EC) decided to give South Africa three months in which to release Nelson Mandela and other political prisoners, to lift the state of emergency, and to unban the African National Congress, failing which it would take action. In September 1986 the 12 foreign ministers acknowledged the failure of the diplomatic pressure on the South African Government: none of the above-mentioned aims had been met. However, the EC member States were not in agreement on the scope of the sanctions package. The Netherlands, Denmark and Ireland favoured a parcel of sanctions including a coal embargo, but due largely to the opposition of the Federal Republic of Germany and Portugal, supported by the United Kingdom, coal was excluded.1 Since then Denmark (1988) and Greece (1989) are reported to have tried to expand the sanctions package by including coal, but without success, although the Spanish Foreign Minister was reported to be promoting a new offensive for a common coal sanction.2 In recent years, but before the release of Mr. Mandela, the Governments of both the Federal Republic of Germany3 and Belgium* showed a more positive attitude towards a coal ban, but this was never embodied in any formal decision.

This Act forbids imports of South African coal except by power companies for up to six months after the Act entered into force. A total coal embargo has been effective from 15 December 1986.The Danish embargo is enforced by the customs authorities which base their supervision on the certificates of origin of the coal. Furthermore, the laboratories linked to the buyers of coal are required to check the coal chemically, once in the country of mining and once on the incoming ship. This double check is obligatory (see also paragraph 4.2 on physical analysis). France On 13 November 1985 the then Prime Minister, Laurent Fabius, told the National Assembly that coal contracts between South Africa and the French stateowned companies E16ctricit6 de France and Charbonnages de France10 would not be renewed. This partial boycott came into effect in 1987. Ireland The Irish Government proclaimed a partial boycott according to which state-owned companies like the national Electricity Supply Board were not allowed to import South African coal after 1987.11

Several other international organisations intervened in an attempt to persuade the Community to impose a coal embargo, namely the International Confederation of Free Trade Unions (ICFTU),5 the Miners International Federation, the European Trade Union Confederation, the European Parliament (resolution of 1987) and the African, Caribbean and Pacific (ACP) countries,6 which have special ties with the European Community.7 However, the release of Nelson Mandela and other political prisoners, as well as the partial lifting of the state of emergency in February 1990, resulted in a postponement of further EC sanctions.8

Belgium and Luxembourg The Governments of Belgium and Luxembourg have never supported national coal embargoes, despite strong pressures from within the ruling coalitions, opposition parties, and public pressure groups.12-13 The Netherlands In 1986 the Government of the Netherlands strongly supported a coal embargo by the European Community, but no national coal embargo was adopted because of the opposition by the Foreign Minister.14 After the recent changes in South Africa it is very unlikely that the Netherlands will impose further sanctions, and the longawaited law on the prohibition of new investments was withdrawn.15

Denmark As in the other Nordic countries, Danish public opinion played an important role in persuading the Government to impose a national coal ban against South Africa. As early as 1983 the Folketing, the Danish Parliament, adopted a resolution in which it asked the Gov-

At the company level, the GKE (Gemeenschappelijk Kolenbureau Electriciteits-productiebedrijven), the 17

Nelson Mandela, it was the first Government in the world to lift its very limited national sanctions package.27

exclusive purchaser of coal for all electricity producers in the Netherlands, has a policy of excluding South African coal. The supervision of this voluntary embargo relies on the certificate of origin and registration of shipping movements. In the case of coal blends, chemical analysis has to be applied.16

At company level, both the British electricity producers, the Central Electricity Generating Board (CEGB) and the South of Scotland Electricity Board (SSEB), have a policy of excluding South African coal.28

The Federal Republic of Germany The Government of the Federal Republic of Germany has been among the explicit opponents of a national coal embargo. After public criticism in 1986, the import of South African coal was limited to 4 million tons a year (with a margin of 5 per cent).17

1.2. The Nordic countries In response to public opinion, the Nordic countries imposed voluntary coal embargoes from the beginning of the 1980s. In 1985 the joint Nordic plan of action stated that the absence of binding sanctions must not prevent individual countries from taking their own measures. As a consequence, in 1986-87 four of the five Nordic countries adopted a mandatory coal embargo, namely Denmark, Norway, Sweden and Finland. Iceland was in a separate position because the country did not import coal and therefore had no special legislation on the subject.29

At the state (Lander) level, the Governments of the States of Bremen, Hamburg and Saarbriicken imposed a ban on the purchase of South African coal by their public electricity producers.18 Spain The Government of Spain has never been in favour of unilateral action on a coal embargo. It appeared to prefer an EC coal embargo.19 The Government advised the buying agency (Carelec) for the union of private electricity generators (UNESA), who produce 75 per cent of Spanish electricity, to use some non-South African coal.20

At a March 1990 meeting of Foreign Ministers in Finland, the five Nordic countries agreed that South Africa was making progress towards dismantling apartheid, but decided to continue their coal embargo and other economic sanctions.30 (Because Denmark is also a member of the European Community, the Danish measure was included in paragraph 1.1.)

Italy The Government of Italy has not initiated any sanction on imports of South African coal. However, in 1988 and 1989 members of Parliament and trade unions protested against South African coal imports, which go mainly to the state electricity company ENEL. 21,22

Norway The Norwegian "Act on Economic Boycott against South Africa and Namibia" was presented to the Storting, the Norwegian Parliament, on 14 November 1986 and was passed on 20 March 1987. The provisions took effect on 20 July 1987. It prohibited the importation of coal originating from South Africa.31

Greece The Government declared its opposition to South African coal imports as early as 1984.23 Although this declaration has never been retracted, Greek imports of South African coal have increased year by year.

Sweden On 12 March 1987 the Swedish Government submitted a Bill to the Parliament, the Riksdag, prohibiting all trade with South Africa. South African coal was banned by government ordinance from 1 July 1987, the ordinance taking effect on 1 October 1987.32 The police and the customs authorities were charged with enforcement of these measures.

Portugal The Portuguese Government is not in favour of a national coal ban. There is a large Portuguese community living in South Africa, many of whom vote in Portuguese elections, and the Government is possibly wary of their response24 should sanctions drastically affect their livelihoods in South Africa. The United Kingdom The Government has been a strong opponent of sanctions against South Africa.

Finland During 1986 Finnish trade with South Africa decreased substantially, as a result of measures such as export control and a blockade enforced by the trade unions. On 2 April 1987 the Government submitted a Bill to Parliament on the prohibition of trade, and on 1 July 1987 the Act on certain measures against South Africa went into force, allowing for a period of transition until 1 October 1987 after which the importation into Finland of South African coal was prohibited.33 The ban is supervised by the customs authorities and by the Foreign Trade Licensing Bureau.

In 1985 and 1986 the Commonwealth tried to put pressure on the British Government to accept an extensive sanctions package, and the then Prime Minister agreed that her Government would not veto a coal embargo by the European Community, should the other members agree to one.25 During the past few years the position of the British Government has not changed,26 and after the release of 18

middlemen. Recent reports show that this trade is now being conducted openly.41

1.3. United States of America The United States Congress passed the Comprehensive Anti-Apartheid Act (CAAA), which banned, among others, the import of South African coal.34 The Bill was adopted on 2 October 1986 after Congress overrode a presidential veto by an overwhelming majority. The coal sanction took effect on 1 January 1987.

In the light of recent political developments in Eastern Europe, many countries have lifted their official trade bans. Poland, for example, has long been interested in providing the technology for the Mossel Bay gas project, and in 1984 a Polish delegation visited South Africa. More recently, a South African diplomat visited Warsaw to discuss the sharing of coal mining technology.42

In 1988 the American customs authorities investigated 20 cases of allegedly illegal imports of South African goods into the United States, most of which involved falsifying a product's country of origin. It is unlikely that any of these cases concerned coal.35

1.6.

The ASEAN countries have not adopted a special policy towards South Africa.

In July 1991 President Bush announced that he was satisfied the South African Government had met the requirements set by the CAAA for the lifting of sanctions. The requirements were the unbanning of all political parties; ending the state of emergency; the repeal of specified apartheid laws; the release of all political prisoners; and an undertaking by the Government to enter into good faith negotiations. President Bush duly signed a Presidential order on 10 July 1991 lifting the sanctions imposed by the CAAA. 1.4.

Asian countries

Japan In 1986 Japan decided to follow the European Community policy in moving towards sanctions.43 At the end of 1986 the Japan Ministry of International Trade and Industry (MITI) warned the users and importers of coal not to increase the purchases of South African coal beyond the level of 1986. Whether volume or value was meant remained obscure.44

Commonwealth countries

Because of the decreasing trade between the United States and South Africa as a consequence of the decline in trade between South Africa and the USA after the adoption of the Anti-Apartheid Act of 1986, Japan became the leading trading partner of South Africa in 1987.45

At their Review Meeting held in London on 3-5 August 1986 the Commonwealth Heads of State and Government, with the exception of the British Prime Minister, agreed to ban South African coal imports.36 Canada Imports of coal of South African origin were prohibited from 1 October 1986.37 Coal was then placed on the Import Control List and therefore requires an import permit for entry; no such permits have been issued. The Import Controls Division in the Special Trade Relations Bureau is charged with the enforcement of the ban.

After intense international criticism, the MITI and the Foreign Affairs Department agreed to reduce the import of South African coal below the 1987 level in dollar terms.46 In April 1988 the policy was tightened in that South African coal imports had to be reduced below the 1987 level both in value and volume.47 The electricity companies, which are partially controlled by the State,48 and the steel mills, were asked to "maintain a cautious behaviour concerning the import of South African coal into Japan so that the effectiveness of the sanction measures against South Africa which the other countries concerned are taking will not be threatened."49

Australia The Customs Tariff Act of 1987 prohibited the import of South African coal.38 New Zealand On 21 April 1987 the import of coal from South Africa was banned by the Customs Import Prohibition (Sanctions) Order.39

The International Coal Report (22 February 1991) has recently revealed that the Ministry of International Trade and Industry of the Japanese Government has advised coal importers that it is no longer necessary to restrict the import of South African coal. This is a response to the positive political reforms taking place in South Africa.

India On 17 July 1946 the Indian Government banned all trade with South Africa. The relevant authorities were also instructed not to allow vessels flying the South African flag to dock in Indian ports, and Indian ships do not call at South African ports.40

Hong Kong In 1986 Hong Kong, a British colony, decided to follow the European Community in its sanctions policy. In the same year the Hong Kong Government adopted bans on the import of gold coins, iron and steel, declaring that it sides with its major trading partners as regards the sanctions issue.50

1.5. Eastern Europe Officially, Eastern European countries had no trade or other relations with South Africa. In practice, though, the Eastern European countries are said to have imported a significant amount of South African coal via 19

including a coal ban. However, the countries of the Southern Africa Development Co-ordination Committee (SADCC), due to their geographic and economic situation, have not adopted coal embargoes. Mozambique, Lesotho and Swaziland especially have imported small amounts of South African coal.53

South Korea Although the South Korean Government has prohibited political, diplomatic and cultural exchanges with South Africa, it has taken no steps towards a coal ban or other economic sanctions.51 Taiwan In East Asia only Taiwan has official diplomatic ties with South Africa. Taiwan has no trade restrictions with regard to South African goods (including coal).

1.8. Trade unions

China China has not officially maintained trade relations with South Africa for a long period. Nevertheless, China started to import South African coal in 1989.

All important international federations of trade unions have adopted resolutions in favour of an economic boycott of South Africa: the International Confederation of Free Trade Unions (ICFTU), the World Federation of Trade Unions (WFTU), the World Confederation of Labour (WCL) and the European Trade Union Confederation (ETUC). This also applies to other organisations such as the Miners International Federation (MIF) and the International Transport Federation (ITF).

Israel Israel and South Africa have developed close economic relationships in a number of spheres. Under pressure from the United States Congress, in September 1987 the Israeli Government decided to ban imports of ten South African products. Coal was not included.52 1.7.

National trade unions in a number of countries have also supported an embargo on South African coal. For example, members of transport unions in France, the United Kingdom and Denmark refused to unload South African coal on a number of occasions.

Africa

The Organisation of African Unity (OAU) has supported the international appeals for economic sanctions,

20

Notes 1 Europa van Morgen (EC), 15 Nov. 1989; NRCHandelsblad (Netherlands), 26 May 1987. 2

The Citizen (South Africa), 17 Feb. 1989.

26

Coal Week International (United States), 10 Jan. 1989.

27

Southscan (United Kingdom), 23 Feb. 1990; West Africa (United Kingdom), 26 Feb. 1990.

28

Letter of the CEGB to SRB, 28 Apr. 1989.

29

Letter of the Icelandic Embassy (London) to SRB on 1 Feb. 1990.

3 Financial Times (UK), 22 Apr. 1988; 21 June 1988. 4

De Standard (Belgium), 6 Oct. 1988.

5

30 Coal Week International (United States), 20 Mar. 1990.

Letter of the ICFTU to members of the ICFTU Coordination Committee on Southern Africa, 12 Apr. 1988.

31 See enclosure 3. 32

See enclosure 4.

6

The Citizen (South Africa), 23 Apr. 1988.

33

See enclosure 5.

7

Resolution on South Africa, 7 July 1988, EC documentation B2-514/88.

34

See enclosure 6.

35

GAO (Washington), South Africa, Trends in trade, lending and investment, Apr. 1988.

36

Letter of the Commonwealth Secretariat to SRB, 24 Jan. 1990.

Statement by M. Fabius, 13 Nov. 1985; Liberation (France), 14 Nov. 1985; International Coal Report (United Kingdom), 22 Nov. 1985.

37

See enclosure 7.

Letter of the Minister of Health, Mr. Alan Boushad, 9 Oct. 1986; Irish Times (Ireland), 18 Aug. 1987; letter of the Embassy of Ireland to Shipping Research Bureau (SRB), 9 May 1990.

39

See enclosure 9.

40

See enclosure 10.

41

Weekly Mail (South Africa), 16 Feb. 1990.

42

The Independent (UK), 4 Jan. 1990.

43

14 Europa van Morgen (EC), 15 Nov. 1989.

The Times (UK), 20 Sep. 1986; The Citizen, 7 Nov. 1986.

44

International Coal Report (UK), 5 Dec. 1986.

15 Volkskrant, 8 Feb. 1990.

45

i 6 Letter of GKE to Working Group Kairos, 19 June 1987; interview with Mr. van Zijl of the SEP (Cooperating Electricity Producers), 11 May 1989

Financial Times (UK), 26 Jan. 1988; Japan Times (Japan), 5 Apr. 1988.

46

Coal Week International (US), 30 Mar. 1988.

47

Coal Week International (US), 16 Nov. 1988.

48

Early in 1988 the electricity companies were asked by the Japan Ministry of Foreign Affairs to end their South African coal contracts. See the Journal ofCommerce, 14 Apr. 1988; Coal Week International (US), 22 Apr. 1988.

49

International Coal Report (United Kingdom), 9 Feb. 1990.

Letter of the Japan Embassy (Netherlands) to SRB, 5 Mar. 1990.

50

21 Coal Week International (United States), 8 June 1988; 10 Jan. 1989 and 13 Feb. 1990.

Letter of the Hong Kong Trade Department to SRB, 22 Feb. 1990.

51

Letter of the Embassy of the Republic of Korea (Netherlands) to SRB, 13 Feb. 1990.

52

The Citizen (SA), 23 Sep. 1987; Israel Foreign Affairs, Oct. 1989. Coal Monitor, Nos. 1 and 2, Oct. 1989; first quarter 1990, SRB.

53

Hanlon, Joseph, ICDA, SADCC and sanctions, 1989.

8

Europe (EC), 16 Feb. 1990; Arab oil and gas, No. 442, 16 Feb. 1990.

9

See enclosure 1.

10

11

38 See enclosure 8.

12 Amandla (Belgium), Nov. 1989. 13 Trouw (Netherlands), 6 Oct. 1989; Southscan (UK), 20 Oct. 1989.

17 Coal Week International (United States), 10 Jan. 1989. 18

International Coal Report (United Kingdom), 23 Oct. 1987 and 2 Dec. 1988.

19 South Africa: European cooperation and action against destabilisation, seminar report, Madrid, 6-7 Mar. 1989. 20

22 ibid., 5 Dec. 1989. 23 Rand Daily Mail (South Africa), 7 Nov. 1984. 24 The Citizen (South Africa), 17 Sep. 1986; Sunday Times (South Africa), 17 Sep. 1986. 25 The Guardian (United Kingdom), 8 Sep. 1986.

21

Chapter 4 Evasion and supervision

I.

II.2 Changing of origin by re-exportation

Introduction

The most popular way to mask South Africa as the country of origin of coal is to change the origin by re-exportation. There are two possibilities : the re-export of pure South African coal or the re-export of South African coal mixed with coal of another origin.2

South African coal exporters use different methods to evade the coal embargoes which some importing countries have imposed. Many of these methods are quite legal, and constitute avoidance rather than evasion. Non the less, governments wishing to impose an embargo on imports of South African coal could tighten up their regulations and require certain checks to ensure that such avoidance is not possible. In the case of illegal evasion of existing laws by either the coal exporters or importers, it would be necessary to close loopholes, and possibly to stiffen the penalties, for the embargo to be made effective. This chapter describes some of the forms of avoidance and of evasion that have come to light in recent years, cites certain examples, and details some of the countermeasures which governments could impose if they wished to effectively embargo imports of South African coal.

11.2.1 Pure South African coal. Any trading company could import South African coal into a non-boycotting country and then re-export the coal to a third, boycotting, country. When the trader/importer in the third country is required to report the country of origin, it does not mention South Africa but the country from whence the coal was re-exported. Re-exportation may hence change the listed origin of the coal from "South African" to that of the non-boycotting country from which the re-exportation took place. 11.2.2 Mixed coal. South African coal is often mixed with other coal and subsequently re-exported as a blend. One of the best known and widely used mixtures is the socalled "Dutch Blend" which includes South African coal.3

The easiest form of avoidance occurs when the South African producer exports the coal via the harbour of Mozambique, Maputo, which is close and convenient to the collieries.

An example of such re-exportation may be at issue in the case of coal exports from the Netherlands to the United Kingdom. The United Kingdom figures indicate that in 1987 1.7 million tons of coal was imported from the Netherlands, a country which produces no coal itself. For 1988 this figure increased to 2.2 million tons4 All of this coal originated in countries other than the Netherlands, and yet it is listed as an import from the Netherlands. A part of this "Dutch" coal may have originated in South Africa.

Another frequently used method is to export the South African coal to a non-boycotting country, and then to re-export it, under a new label, to a country imposing restrictions. Finally, documents can contain false or inaccurate details. It is important to distinguish between the import of coal and the transit of coal. Import demands that customs be cleared, whereas transit does not involve customs clearance at all. Instead of clearing customs, transit coal is discharged and temporarily stored in fixed port areas, after which it is transported to third countries (see section on the inaccurate customs declarations).

II.3 Inaccurate customs declarations Tampering with shipping and customs documents is an illegal, but highly effective, method of importing South African coal into countries with an embargo.

II. Avoidance and evasion

An example of inaccurate customs declarations may have occurred when more than 0.7 million tons of South African coal, which the Dutch statistical office recorded, went via Dutch harbours to the United Kingdom in 1987 but was not registered as South African in the British trade statistics. Another exporting source had been cited on the documents.

II. 1 Export via Maputo It has often been reported that South Africa uses the Mozambican port of Maputo to circumvent coal sanctions. However, this would only constitute an offence if the South African coal was being fraudulently sold as coal of Mozambican origin.1 22

II.4 Effective supervision of an embargo

Comparison of the United Kingdom import figures of South African coal and the Dutch transit figures of South African coal going to the United Kingdom in thousands of tons

United Kingdom import Dutch transit figure

figures

1986

1987

313 1060.9

28.2 732.7

The paragraphs below describe two different methods of supervision, the control of documents, or physical checks on the coal. The latter is generally regarded as the more effective of the two methods. There are, in turn, two ways of physically checking the origin of coal, of which the petrological method is considered the more reliable. II.4.1 Documentary controls

Sources: United Kingdom Department for Trade/Dutch Statistical Office.

The most obvious point at which to check on the observance of a coal embargo is the customs clearance. Either the captain of the ship, or the agent, has to fill in forms which indicate the country of origin. In the case of embargo supervision the country concerned could include in its legislation a provision that the forms should indicate the country of mining as well.

A similar motive lay behind plans to set up a transshipment centre for South African coal in Israel in order to circumvent Western embargoes. Africa Confidential reported in Vol. 30, No. 23, that negotiations were under way to establish trans-shipment ports at Ashdod and Eilat.

To verify the accuracy of the given information the customs should require a so-called "certificate of origin" with every cargo of coal. For countries which already ban South African coal, the submission of certificates of origin is an accepted method. A certificate of origin, drawn up by the Chamber of Commerce of the exporting country, would indicate without any doubt where the coal originally comes from. An exception would have to be made for coal blends as it is self-evident that blends could not obtain a certificate of origin.7

South Africa showed interest in the use of the newly constructed Toros Bulk Terminal in Iskenderun, Turkey, as a coal trans-shipment centre.5 Another example of such dubious practices was reported in the press when some Belgian firms transformed more than 1 million tons of South African coal into "Australian" coal for French power plants, which officially ban South African coal. This was a case of re-exportation, which had to be supplemented by falsified documents because the French central purchasing Association, Technique de l'lmportation Charbonniere (ATIC), requires that the country of origin of coal supplied to it, be specified.6

N.4.2 Physical analysis of the coal Customs control is a necessary, but not sufficient, method for checking on blends of coal or falsified shipping documents. In cases of doubt, however, a physical analysis would be crucial.

Amount of South African coal illegally sold in France in thousands of tons 1986

1987

1988

300

500

150

The Danish Government has a system whereby end users supervise the implementation of the legal embargo by checking the coal chemically. Laboratories bound to the buyers of the coal compare the properties of the coal such as ash, sulphur and moisture. One check is made in the country where the coal was mined, and one in Denmark itself, when the coal is still on the incoming ship. This double-check is an effort by the Danish Government to rule out the possibility of an importer evading the coal ban.8 Countries could insist that a third check be performed upon delivery to the final consumer.

Source: La France, Ministere de I'lndustrie.

A rather odd case of apparent falsification came to light recently when it was revealed by the International Coal Report (1 June 1990) that three shipments of US coking coal which appeared in published export listings as bound for Europe, were in fact shipped to South Africa. The Customs manifests reflected false destinations, which in terms of US law was an offence carrying only a $1,000 fine, unless it could be shown that the captain acted deliberately. It was remarkable that the shippers resorted to such tactics given that it was not illegal to export coal to South Africa. When asked by the International Coal Report whether restrictions on the sale of goods for military or police purposes might apply to coal used in the manufacture of steel which could be used in armaments production, Sally Miller, Divisional Director for African Trade at the US Commerce Department said "We don't go nearly that far down the line."

According to shipping agents, more and more countries want chemical tests of the coal performed in the original port of lading. This is purely for commercial reasons since buyers want to know the properties of the coal they are purchasing. Countries which are looking for some kind of embargo control could easily follow these market trends and initiate such a system of chemical checks. Because the buyers of coal may want to evade sanctions, it may be more effective to oblige the customs, which in.most cases have their own laboratory facilities, to do the chemical tests. Another possibility is that the checks be performed by the national economic supervision services. 23

Unfortunately, chemical analysis is not considered 100 per cent reliable in determining the origin of coal. The differences among countries in percentages of sulphur, etc., are small, and in the case of blends it is even more complicated.9

on the basis of plant remains, makes it possible to trace most shipments back to the specific country and sometimes even to the specific mine. Important here are the age and class of the coal. The method is relatively inexpensive and can be quickly applied; it does demand some experience, however.10

A more reliable check is the petrological method of analysis, developed by among others British Coal, which,

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Notes and references 1

Coal Magazine, Feb. 1988.

2

It must be noted that no criminal intenfon the part of companies mentioned in this section is suggested.

3

4 5

South African coal streams via the Netherlands, 1985-86; Coal Section Working Group Kairos, Mar. 1989. International Coal Report, Monthly Statistics.

6

De Morgen (Belgium), 1, 4 and 5 Oct. 1988, 20 Jan. 1989; he Monde (France), 8 and 9 Oct., 22 Nov. 1988.

7

Interview with an official of the Dutch Customs Office, 8 May 1989, The Hague, Netherlands.

8

Interview with an official of the Danish Ministry of Foreign Affairs, 13 Apr. 1989, Copenhagen, Denmark. Interview with a chemical analyst of a shipping agency, 12 Apr. 1989, Rotterdam, Netherlands.

9

10

International Coal Report, 25 Sep. 1989.

25

Interview with a Penological Researcher of British Coal, 27 Apr. 1989, Doncaster, United Kingdom.

Conclusions

1. The group notes from the study that South African coal exports have been expanded despite the existance of cheap and appropriate alternative supplies.

customers, have undermined the effect of embargoes imposed by other States. This points to the need for increased international cooperation and coordination. The study indicates that certain member States of the European Community, and Japan, remain the major markets for South African coal exports, and are likely to incease their imports in the nextfiveyears. Countries of Eastern Europe and South East Asia that previously boycotted South African goods are emerging as potentially important consumers.

2. Expansion of coal exports was assisted by the existance, and development, of good infrastructure, ample managerial and financial expertise in the wellestablished mining industry, occasional help from government, very favourable geological features, and plentiful supplies of cheap labour. 3. The group is of the opinion that a larger number of countries could apply an effective embargo on the import of South African coal.

9. The group is of the opinion that trade relations, existing and developing, should not have the effect of undermining international pressure on the South African Government in the process of negotiations towards the elimination of apartheid and the establishment of a united, non-racial and democratic South Africa.

4. The evasion of existing measures could be prevented more effectively than appears to be the case at present. 5. Countries seeking to impose and/or monitor a coal embargo might make use of petrological analysis of coal samples to establish the exact origin of coal imports.

10. The production price advantage enjoyed by South African producers is likely to continue to attract export orders for coal. The group is of the opinion, however, that this advantage is partly a function of low wages and poor working conditions associated with apartheid. The group draws the attention of States importing South African coal to the unacceptable working conditions in South African mines and urges them to use whatever influence they have to improve conditions for black mineworkers.

6. In countries which have imposed embargoes on the import of South African coal, but which import coal blends, petrological analysis might also be used to ensure that the blend does not contain South African coal. 7. There is evidence that coal of South African origin is not always properly described. Coal imported via the harbour of Maputo should be checked to ensure that it is not of South African origin. The same applies to coal ostensibly originating in any of the front-line States.

11. The method of collecting data on accidents in coal mines does not conform to international standards. Every effort should be made to improve the collection, publication and analysis of accident statistics according to generally accepted international practice.

8. New markets developed by South African coal exporters, and increased purchases by existing

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Appendix

Documents relating to the prohibition of the importation of coal of South African origin

Enclosure 6: Prohibition on importation of uranium and coal from South Africa (United States)

Enclosure 1: Act Prohibiting Import of Coal from the Republic of South Africa and Namibia (Denmark) Enclosure 2: Act prohibiting import of coal from the Republic of South Africa and Namibia (Sweden)

Enclosure 7: Notice to importers - uranium, coal, iron and steeel and agricultural products of South African origin (Canada) Enclosure 8: Embassy of Australia - letter to Shipping Research Bureau Enclosure 9: The Customs Import Prohibition (Sanctions) Order, 1987 (New Zealand)

Enclosure 3: Act relating to an economic boycott of South Africa and Namibia to combat apartheid (Norway)

Enclosure 10: Embassy of India - letter to Shipping Research Bureau

Enclosure 4: Ordinance concerning the prohibition of trade with South Africa (Sweden) Enclosures: Act on the amendment of the Act on certain measures against South Africa (Finland)

27

Bibliography

A. van Heerden: Sanctions and their effect on the economy and employment, Report to COSATU 1988.

International Coal Report - various issues. Financial Times Business Information, London.

Commonwealth Committee of Experts: The sanctions report, Penguin, 1989.

Eurostat - Statistical Publication of the European Community. Energy Statistics, 1989. ICFTU in conjunction with the Miners International Federation: Coal, Brussels, 1988.

J. Hanlon and R. Omond: The sanctions handbook, Penguin, 1987. UN General Assembly: Policies of apartheid and the Government of South Africa, Restrictive measures affecting externally dependent areas of the South African economy, A/44/555, Nov. 1989.

28

International Energy Agency: Coal Information 1989.

ISBN 92-2-106471-9

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