South Africa's Mining Sector: Country's reliance on coal provides lifeline to miners
Updated 19:29, 27-Jul-2019
With temperatures hitting record highs across the globe, and the obvious need to invest in more clean, green energy sources, one would think the coal industry is well and truly dead. However, South Africa's coal sector disagrees. As CGTN's Angelo Coppola explains, the country's singular reliance on coal to generate power is providing a lifeline to miners.
The biggest user of coal for electricity generation in South Africa is government-owned Eskom. And while several of its mines are nearing their end of life, there's still a huge demand for coal. Some 1.3 billion tons of it.
DAN MASHIGO PRIMARY ENERGY GENERAL MANAGER, ESKOM "Of that one point three billion tons, between now and 2030, that shortfall is about 470 million tons. The balance of it needs to flow between 2030 and 2050. The biggest volume is Kusile, because we built Kusile without a tied colliery, then followed by Majuba, because Majuba doesn't have like a tied colliery."
Coal miners have had two markets with a commonly held belief that the export coal market was the bigger income generator. That's until recently.
XAVIER PREVOST COAL ANALYST, XMP CONSULTING "The prices of exports are not as brilliant as they used to be. But the prices in the local market are much better and much higher. So I suspect that in the future we are going to take more and more to sell more local coal than export. So exports are going to decrease, while inland sales are going to increase."
Eskom is also coming to the party in terms of meeting demand. Having not invested in their mine expansion programs for a decade.
DAN MASHIGO PRIMARY ENERGY GENERAL MANAGER, ESKOM "We are reinvesting. The board has made a decision and we will be starting at Malta, to sink new shafts, Kriel will follow, and the list will go on. I think in the next four, five years, there's about 10 billion rand of capital that needs to flow to recapitalize these mines so they can go back to their production capacity, which will benefit the customers."
South Africa has enough coal reserves to satisfy this demand and then some.
VUSLAT BAYOGLU MENAR MANAGING DIRECTOR, SOUTH AFRICA "Because of the logistics component, if you look at Botswana or Zimbabwe, it's too far, and South Africa has got enough coal in Mpumalanga and Waterberg, so first depleting the coal in Mpumalanga and then moving to Waterberg, then when all this coal is depleted, which is about 31 billion tons, then one can look at Botswana and Zimbabwe."
Botswana is attractive nonetheless, this as the country aims to be power and energy independent. And it offers fiscal incentives.
MASHALE PHUMAPHI MANAGING DIRECTOR, SHUMBA ENERGY "Historically Botswana has got one of the largest resource bases in terms of coal, on the continent, and for our company apart from them being fairly low cost, and fairly large in size, which is important for big projects, whether its power generation petrol chemicals, and or long term supply contracts, Botswana is also a great destination as a country."
ANGELO COPPOLA JOHANNESBURG, SOUTH AFRICA "Contrary to popular belief, the coal industry in South Africa is alive and well and there's lots of opportunity. There's also that carbon tax waiting for them. I'm Angelo Coppola, CGTN, JOHANNESBURG, SOUTH AFRICA."