The South African Revenue Service (Sars) led what was described as a search and seizure operation across five provinces where the smugglers are active - Gauteng, Mpumalanga, KwaZulu-Natal, Free State and Limpopo.
The suspects include former employees of the state-owned electricity firm, Eskom.
A statement said the scam involved high-grade coal being sold off and replaced with a low-grade product which has been damaging power stations.
The issue of coal theft has been reported in South Africa's media for several years. It is widely felt that high-level corruption long prevented any action being taken to stop the scam.
Source: BBC
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