There was a flurry of activity among staff at the swanky Westin hotel in Cape Town just as the 15th annual Southern African Coal Conference was about to kick off on Thursday morning. Security was tight, preventing even delegates entering quickly, and uneasy personnel waited outside for the sideshow to begin.
The sideshow was a protest against coal staged in front of the venue by Extinction Rebellion, a global environmental movement.
But the activists who protested with “no future in coal” placards outside have more in common with the suited executives gathered in the cool comfort of the hotel than they might think. In particular, both can see the writing on the wall for SA coal. They disagree, of course, on whether it should be saved.
SA’s 140-year-old coal mining industry has always been closely linked with the country’s economic development and remains a significant sector, contributing 7% to GDP.
Within the mining sector it was the largest revenue earner, bringing in R145bn of the sector’s total R496bn in earnings. Coal exports make up about 22% of SA’s foreign exchange earnings. Furthermore, coal mining is the third-largest employer in SA’s mining sector, making up 19.7% of its workforce.
Deep despair
But the weighty numbers don’t reflect the industry’s deep despair at how to survive the global energy transition. Fossil fuels have fallen out of favour as the world seeks to reduce carbon emissions in response to growing concern over climate change. Government policy is following suit, investors are moving away from coal, and traditional financiers are increasingly unwilling to fund new projects.
Though mineral resources & energy minister Gwede Mantashe is accused of being pro-coal, miners say policy has sealed their fate.
As Bongani Motsa, senior economist at the Minerals Council SA, puts it: after a long and prosperous union between SA and its coal industry, the 2019 Integrated Resource Plan (IRP) marked the end of the relationship.
The gazetted IRP to the industry is as if divorce papers have been served. Unless we as an industry take serious action, drastic action, coal is dead
— Bongani Motsa, senior economist at the Minerals Council SA
“When the IRP was gazetted in 2019 and reality struck,” says Motsa. “It disregarded the fact that we have been loyal as an industry to this country since the dawn of industrialisation.”
Even though industry made inputs into the drafting of the IRP, it did not change the fact that Eskom’s coal consumption is projected to drop significantly in the years leading up to 2030.
“Effectively, it is a death knell for the industry”, Motsa says. “The gazetted IRP to the industry is as if divorce papers have been served,” he says. “Unless we as an industry take serious action, drastic action, coal is dead.”
Speaking from the audience, Xolile Mdolo, CEO of junior miner Zomhlaba Resources, said it was sad to see coal producers at the conference with seemingly no will to fight. “We are just sitting and [are] dumbstruck. We are ... unstructured and probably unwilling to put our voice out there. As the coal industry we need to wake up and start fighting back.”
One way to try save the industry — a point raised at the event — is to adopt viable cleaner coal technologies, some of which can produce high-value products from coal and its emissions.
The inaccessibility of funding was raised as a prominent issue among those seeking to invest in coal opportunities in SA. Those who have succeeded have had to be highly innovative. The coal industry must “come together and help each other out on this”, said Morne du Plessis, CEO of Minergy, an emerging Botswana coal miner.
Hurbey Geldenhuys, COO of coal at Vunani Resources, is one of the few who are notably upbeat about the prospects for coal, which he expects will play a critical role in global poverty alleviation and growth. For SA, he sees the future as particularly bright.
“We’ve got coal, lots of coal. We’ve got the skills base. We understand operational risk, we understand investment risk and potential return. Unlike the rest of the world, we have a large mining component on our local stock market, and investment professionals who understand mining. Coal has relatively short lead times and relatively low capital expenditure,” he says. “So ... coal mining is not a good idea, it’s a great idea.”
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