Thungela Resources will have to clear many hurdles if it is to mine its coal-rich asset on the border of Gauteng and Mpumalanga after its water use licence was rejected in the interests of protecting farming and water resources there.
The JSE-listed coal major spun off from Anglo American has mining rights to an area of about 3,400ha. The open-cast area Thungela wants to mine is about 900ha. Evidence to the Water Tribunal was that the proposed Palmietkuilen coal mine has the capacity to produce 2.4-million tonnes a year with its resources of 125-million tonnes and life of 53 years.
The tribunal confirmed an earlier department of water & sanitation decision to turn down Thungela’s water use application, dealing a blow to the mining house, which is looking to expand its production capacity.
"We note the specialist studies also highlight the issues of food security and how the area contributes to the national agricultural output. Weighing the information before us, specialist studies, objectors’ concerns, and witness testimony — the socioeconomic impacts of not granting the [licence] is negligible relative to the socioeconomic impacts of granting [it] and uprooting the thriving agricultural economy in the area," the tribunal ruled.
"Socioeconomic aspects considered together with the long-term environmental (water) impacts, indicate that efficient and beneficial use of water in the public interest would be promoted by declining the [licence]."
The licence the company wants will authorise it to take water from a resource, divert the flow of water and alter the bed, banks, course or characteristics of a water course.
The site of the mooted mine is 12km east of Springs, Gauteng. Several water sources of the Blesbokspruit run through the project area and one of these tributaries includes the Dwars-in-die-wegvlei, Verdrietlaagte stream and Aston Lake.
The tribunal relied on social and economic impact assessment reports showing that the locality of the proposed mine is a thriving agricultural area.
Experts testifying for the department said the area has been farmed for decades, that this likely to continue and that it not be disrupted by mining. The tribunal found that the social and economic benefits proposed by the Thungela project, including jobs, pale in comparison to the longevity and self-sustaining nature of agricultural activities.
The watchdog found that the loss of agricultural land would be permanent as mitigation and rehabilitation measures Thungela proposed would not restore land to current land uses.
"While the evidence from the witness demonstrated that mining jobs pay better than agricultural jobs, the evidence also showed that agricultural activities endure beyond a finite time unlike mining which is limited to the resource availability," the tribunal said.
This is a second blow to Thungela, one of SA’s largest thermal-coal exporters. In 2019, the project was halted by forestry, fisheries and environmental affairs minister Barbara Creecy because it is an important agricultural area. Thungela has an option to take the tribunal’s decision on judicial review. Should the proposed project go ahead, it will house an open-pit mine, processing plant and fuel-storage facilities, haul roads from pit to plant and from plant to mine access points, and various conveyor belts.
Thungela, one of Eskom’s coal suppliers, has been on an expansion and diversification drive. It has just concluded the acquisition of Australian thermal coal miner Enshan in a deal worth R4bn.
The transaction, which came into effect this month, is part of the group’s strategy to pursue geographic diversification outside its core market of SA.
The tribunal’s decision to reject its appeal also suggests that coal mining houses will struggle to get licences for new projects as the government aims to curb emissions and embrace a just transition in line with its global commitments and the National Development Plan.
"The effectiveness of any mitigation measures developed without this data (climate variation dynamics data) are open to doubt. This is in addition to the 53-year lifespan of the mine conflicting with the government’s development policy and climate change mitigation trajectory and planning," the tribunal noted.
Thungela spokesperson Tarryn Genis said the company would appeal against the tribunal’s decision.
"Thungela confirms the matter was heard by the Water Tribunal and subsequently denied. The act allows for an appeal process and as such, Thungela has lodged an appeal. The appeal is scheduled for a hearing in the High Court in 2024. As part of the legal process the matter is sub judice and therefore Thungela awaits the decision of the court," said Genis.
Two weeks ago, Business Day reported that Sasol flagged the "onerous" requirements introduced by the department in the licence renewal processes.
It and Sasol are at loggerheads after the former declined the energy major’s water use licence renewal application for its largest colliery, Syferfontein, which supplies coal to its Secunda operations.
The Syferfontein Colliery was established in 1989 to supply coal to Sasol Synfuels. It has the capacity to produce 10.9-million tonnes a year.
The dispute is before the tribunal for adjudication.
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