UJ Geology and Minerals Council of SA explore the future of coal in South Africa

UJ Geology and Minerals Council of SA explore the future of coal in South Africa

Publishing Date: 6/10/2019 11:00 AM

Mining has long been integral to the development and advancement of South Africa's economy and has contributed largely in making its economy the strongest on the continent.

The Department of Geology at University of Johannesburg (UJ) together with the  officials from the Minerals Council of South Africa (MCSA), have agreed to explore mutual prospects in the coal sector in order to explore opportunities on display in the South African coal industry value chain and to discuss the relevance of coal in the South African economy. The agreement emanated from a seminar held on 30 May 2019 in Johannesburg.

The discussion also elaborated on the industry's policy, government priority in terms of mining and regulatory framework in the effort to clarify and provide predictable solutions.

"These discussions with different stakeholders are a breakthrough on how South Africa could engage more productively with investors in the mining sector," said UJ's Prof Nikki Wagner, Director of the DST-NRF Centre of Excellence in Integrated Mineral and Energy Resource Analysis (DST-NRF CIMERA).

Prof Wagner said the talks were also a platform to explore current key issues surrounding the use of coal. "The coal industry is under pressure, both locally and internationally, for a variety of reasons. The South African President has signed the Carbon Tax Bill, and the country is obliged to attend to its international "commitments" to carbon dioxide mitigation. Local and international financing for coal-fired power is practically impossible, although financing for new coal mines is still possible in South Africa. Nevertheless, coal will remain part of the global energy mix for the foreseeable future, due mainly to its relative affordability."

Some issues emanating from the discussion pointed out that the coal mining industry in South Africa is viewed as the most transformed of all the resource industries, with a significant number of junior coal miners and black empowerment mining operations. Over 82 000 people are currently employed in the coal industry, and coal production has been relatively stable for the past few years, in contract to declines in other resources. A pertinent question, however, was enquired: why is the coal industry not growing, especially as the demand for export coal to southern Asia has increased significantly over the last 5 years? South African mining policy and bottlenecks to the export ports are major reasons, as well as a lack of investor confidence in our country.

"In South Africa, there will be a decrease in its dependence on this cheap, reliable energy source going forward as renewable technologies become more competitive, and Government drives new oil and gas initiatives. This decline in coal as a primary energy source, however, will result in job losses. Mpumalanga Province, where the coal industry accounts for 35% of its economy, faces daily social unrest and increasingly violent protests as the affected communities are concerned about their futures," explained Prof Wagner.

Over 50 people attended the seminar, including various stakeholders from industry, academia, parastatals and Government. The key themes included:  The need to ensure that Government initiatives to assist junior miners are actioned; Reviewing the Integrated Resource Plan (IRP) and a carefully considered transition to a low carbon economy- with an understanding of the implications of giving up coal as a base-load energy source.

 "It is clear that Eskom's reliance on coal will decline in the future. The latest IRP indicates that after 2030 there will be substantial change in Eskom's electricity supply, with only 46% from coal (down from 86%). Eskom's role is to produce electricity; this can be from a range of available energy sources, including clean coal technologies. Could, or even should, the skilled labour force in Mpumalanga Province be reskilled in the renewable energy sector, for example?"

"Clean coal technology is certainly possible – it is available. For example, Kusile is being built as a supercritical power station with flue gas desulphurisation technology, as well as it being CO2 capture ready.  Environmental amelioration costs, however, are estimated to be as much as 40% of production costs, and these must be carried by the customer. The electricity price in South Africa has increased by 333% since 2007, significantly higher than GDP growth."

Prof Wagner emphasised the continued need for coal in sectors apart from domestic and international electricity generation. She said Coal plays a vital role in the metallurgical industry (steel production), cement manufacturing and petrochemicals (coal-derived gas has a myriad of uses including tar, ammonia manufacture, liquid fuels, and carbon-based chemicals). The coal-based activated carbon market is growing internationally. A low-carbon economy is possibly avoiding the consideration of these vital industries.

In conclusion, Prof Wagner pointed out that coal remains an important raw material in demand both globally and within our country. South African-based mining companies, adhering to all the required environmental legislation and adding to our economy in a positive way, should undertake the responsible extraction thereof. She said significant research and development is required to understand our carbon-based resources to maximise their utilisation potential as this will encourage the export of finished products rather than raw materials, thus enhancing our economy.

Several speakers and audience members noted that the amount of money spent on research and development across the coal value chain in South Africa is inadequate and certainly far from international levels. The appeal from the seminar is for the newly formed Department of Higher Education, Science and Technology to urgently address the shortage of funding for postgraduate research in South Africa.