SA coal industry have a pipeline of 16 new projects with a combined capacity to produce more than 40-million tonnes a year, valued at R80bn, in a potential bet against the odds, in a world hooked on emission reductions.
The data from International Energy Agency (IEA) comes as the country’s coal industry is at a crossroads, with the government barred from building new coal-fired power stations.
SA’s coal industry has faced many challenges over the past few years as Transnet’s rail inefficiency and pushback from environmental groups hit the industry. In addition, the high court in Pretoria ruled against the government’s plan to approve new coal-fired power stations, citing a failure to take into account the environmental and health effects.
Environmental interest groups have also dragged forestry, fisheries and environment minister Dion George to court over the department’s decision to allow eight of Eskom’s power stations to deviate from basic air pollution standards, the minimum emissions standard.
Environmentalists are challenging the constitutionality of the decision made by the department and the national air quality officer last year to allow Majuba, Camden, Hendrina, Arnot, Tutuka, Kendal, Kriel and Grootvlei to deviate from the minimum emissions standards.
Yet the IEA said SA “remains the African country with the longest project pipeline”, focusing mostly on thermal coal. “At the beginning of 2024 Canyon Coal started shipments from its new Gugulethu coal mine. The mine is set to produce 2.4-million tonnes of coal annually [Mtpa], with half of this output being mid-CV thermal coal at 5,500 kcal/kg NAR (net as received),” the agency said in a research document published in December.
“Another project, albeit a smaller one, is the Mngeni underground section of the Zululand Anthracite Colliery, which started operations in 2024. This project has a capacity of 0.15 Mtpa of met coal.
“The Optimum Coal mine was added to the project pipeline. After years in administration, the new owner, Liberty Coal, settled outstanding legal issues regarding the mine. It is intended to reach a capacity of 11 Mtpa of mid-CV thermal coal. ”
Liberty Coal said Optimum Colliery mined 5.1-million tonnes between January 2024 and December 2024.
“Liberty Coal has also exported close to 3-million tonnes of coal through Richards Bay Coal Terminal since the use of the allocation was again permitted in April 2024,” the company said.
“Liberty Coal anticipates that it will mine up to 7.5-million to 8-million tonnes of coal and export up to 4-million tonnes during the 2025 calendar year.”
With global coal prices hovering at about $109 per tonne, the annual production of these projects translates to more than $4.36bn (or just over R80bn), underscoring demand for black gold both at home and in countries such as India and China — both of which account for lion’s share of roughly 30% of SA coal shipped overseas.
Strategic moves
The report noted that SA logistics group Grindrod was also making strategic moves to acquire coal opportunities in neighbouring Mozambique and Botswana. The two countries signed an agreement to develop the new Techobanine deep water port in the Mozambique capital, Maputo, and the Limpopo railway line last year.
“This would enable landlocked Botswana to export its substantial coal reserves, estimated at about 200-billion tonnes, via Mozambique. Additionally, SA infrastructure operator Grindrod has announced its full consolidation of ownership of the existing Matola Coal Terminal (TCM),” said the IEA.
“The company plans to spend $77m to acquire the remaining 35% of shares from Vitol. Grindrod intends to expand the terminal’s capacity beyond its current 7Mtpa.”
The IEA said that SA, which accounted for 86% of Africa’s coal consumption in 2023, was expected to have increased coal consumption to 165-million tonnes in 2024 as Eskom used more coal.
“Economic activity in SA has seen a slight improvement, and a reduction in load-shedding is expected to increase coal demand... The country continues to run three coal-fired power plants of 4.5GW capacity that were previously set for closure. The lifetime of the three plants will be extended until 2030. Consequently, we project SA’s coal consumption for power generation to rise to 124Mt by 2027,” said the IEA.
“The future of coal demand in SA will be shaped by policymakers’ decisions regarding the coal-fired power fleet, either to invest in their maintenance to keep them running for longer or to phase them out.”
Eskom announced in May that its board had sanctioned the extension of Camden, Hendrina and Grootvlei power stations’ operations until 2030. Previous decommissioning schedules provided for Grootvlei and Camden power stations to be fully decommissioned by 2025 and Hendrina by 2026.
Coal is the mainstay of SA’s energy system, meeting about 70% of installed power generation capacity. But the 2019 Integrated Resource Plan sets out a long-term diversification of the power mix by 2030, and moves towards lightening the carbon footprint of the energy sector while meeting growing energy demand and ensuring a socioeconomically just transition.
Update: January 24 2025
This story has been updated with comment by Liberty Coal.
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