Modern Mining August 2021

Coal still a lifeline for SA as transition begins

While the global focus on environmental, social and governance (ESG) issues looks to phase out coal as an energy resource, the prospects for South African coal pro- duction remain strong for coming decades. Following the 3 rd Coal Industry Day, held online in July, SRK Consulting princi- pal coal geologist Lesley Jeffrey says coal remains a key contributor to the country’s economy – both in terms of energy produc- tion and mineral export revenues. Coal is only recently overtaken by platinum group metals as the country’s leading commodity by sales, but it remains the most significant component of the country’s mining in terms of value added – accounting for 25%. “Strong international coal prices of around US$130 per tonne have raised the attractiveness of exports, with most of South Africa’s export coal going to Pakistan,” says Jeffrey. “China is also opening up oppor- tunities for imports from SA following its trade wrangling with Australia, previously an important coal source for them.” Although there has been less coal

demand from India due to a surge in local production there, South African coal still remains better suited to India’s production of sponge iron, she notes. This suggests that the recent dip in exports to that coun- try may only be temporary; the added advantage is that this market takes rela- tively low-grade product from South Africa. Coal Industry Day presenter Xavier Prévost confirmed that coal remained the largest single source of power generation globally. Prévost also said the coal sector expected a strong recovery in 2021 – a reminder of coal’s central role in fuelling some of the world’s largest economies. Jeffrey highlighted that coal-fired power stations are still being built on a large scale in developing regions like south-east Asia – as this provides an affordable route to powering broader economic development. While South Africa has mined out much of its traditional export quality coal, there remained a long horizon of demand abroad for our lower grade coal. “Unreliable rail services to the Richards

Bay Coal Terminal continue to constrain SA’s coal exports, and this has been exac- erbated by a recent hacking event and the spate of looting in parts of the coun- try,” she says. The export market is vital to sustain, she emphasises, as it creates the economic balance that keeps coal produc- ers profitable while they continue to supply Eskom at low margins. Without the higher- value exports, local electricity prices would likely have to rise even faster to meet the full cost of mining.  Lesley Jeffrey, principal geologist (coal) at SRK Consulting South Africa.

August 2021  MODERN MINING  7