Global seaborne coal exports are expected to fall about 20% by the end of the decade. With big miners leaving fossil fuel behind, SA exporters see an opportunity to increase shipments. But to achieve this, Transnet Freight Rail (TFR) must first arrest the deterioration of its heavy haul freight rail services.
It would not be wrong to say that Thungela is doubling down on coal, but it would be more correct to say that the coal exporter is “doubling down on reality and facts”. According to the coal miner’s CEO, July Ndlovu, despite what you might hear in the “obituaries of coal”, the reality in the markets they supply, such as India, Asia and Southeast Asia, are very different.
“If you look at the markets we serve, three years ago the average age of the coal power fleet was 16 years, three years down the road the average age of coal power stations in these markets have gone down to 13 years. [It shows that] new thermal power stations are still being commissioned,” Ndlovu said at the Coal and Energy Transition Day held in Johannesburg on Tuesday.
Ndlovu said that regardless of stated global objectives to achieve net-zero carbon emissions by 2050 and to transition the energy sector away from fossil fuels towards low-emission technologies, coal is likely to be part of the energy mix up to 2060 and even 2070.
“The [energy] transition conversation is located in the north, in developed countries. In developing countries, the reality is very different. These countries still need to bring hundreds of millions of people out of energy poverty,” he said.
Global estimates suggest that seaborne coal exports will decrease from about 1-billion tonnes now to 800-million tonnes by 2030.
Ndlovu says that the exit of major thermal coal miners opens opportunity for companies such as Thungela.
In response to pressure from investors, miners such as Rio Tinto and Anglo American have moved away from coal as part of their net-zero strategies.
In February Thungela announced it would invest about R4.1bn to buy a stake in an Australian coal mine that will increase its access to Asian markets.
Ndlovu’s sentiments are shared by Vuslat Bayoglu, MD of the privately owned mining investment company Menar.
Menar recently invested R1.4bn in the 2.4-million tonne Gugulethu coal mine near Hendrina, Mpumalanga, through its operating subsidiary Canyon Coal.
Speaking at the event on Tuesday, Bayoglu said they will also, by the end of this year, start developing a new underground coal mine near Bethal, Mpumalanga.
“We see a future for coal, and we are not scared of developing new coal mines in SA,” said Bayoglu.
He admitted that there are challenges for coal miners in SA, including the drop in export capacity due to poor rail performance. But, he said, “all countries have their own challenges”.
He challenged the notion that SA has to invest in utility-scale renewable energy plants, saying the magnitude of investment required would not be affordable for the country.
It is estimated in government’s Just Energy Transition Investment Plan that about R648bn will be needed to decommission coal-fired power stations, expand and strengthen the transmission grid and bring online new renewable energy generation capacity.
SA should rather make use of its abundant coal resources and invest in clean coal technologies. “Rebuilding [coal] power stations with clean coal is the right way to go,” he said.
Ian Hall, director of the consulting firm IH Energy, said SA has about 95-billion tonnes of coal in situ.
IH Energy was commissioned by Richards Bay Coal Terminal (RBCT), from which about 70% of coal that leaves SA is exported, to produce a report on the outlook for coal export from SA beyond 2030.
“Very few coal producers have detailed plans beyond 2035, but if we assume there will be no investment in new coal mines beyond 2035, SA could still be producing enough export coal to export at least 70-million tonnes to 80-million tonnes at least until 2035. Even beyond that there will still be substantial export coal available. This can happen while we decarbonise the local economy,” Hall said.
For this to happen, TFR would have to successfully implement plans to arrest the performance deterioration, which caused coal exports through the Richard’s Bay terminal to drop to a 30-year low of about 50-million tonnes in 2022.
Coal exports processed through the terminal were down from 59-million tonnes in 2021 and 70-million tonnes in 2020. In 2017 about 76-million tonnes of coal left SA through the terminal.
Deterioration was caused by cable theft and the low availability of locomotives, which disrupted TFR rail volumes to the terminal.
Hall said that if TFR could recover to its pre-2020 performance at least until 2035, the additional output and exports of coal could add 180,000 jobs.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.