The International Energy Agency (IEA) estimates that South Africa’s thermal coal operations require annual capital expenditure of about $1.8bn to sustain operating mines and expand where required to meet additional demand.
In its latest report the IEA said South Africa leads the project pipeline on the continent with 12 ongoing projects that will have a combined capacity of 31-million tonnes a year.
“Several projects have transitioned from less advanced to more advanced stages, including Gila (Koppie) coal mine, Kusipongo (Udomo) mine, Makhado Phase 2 and Ukwenama coal mine,” it said.
“Kusipongo and Gila have received permits and are expected to start construction soon, with operations starting in mid-2026 and 2027, respectively,” the IEA said.
“MC Mining has announced significant progress on the second phase of the Makhado mine and expects operations to commence in 2026. The Zibulo extension is a new, more advanced mine that is going to extend Thungela’s underground operations until 2038, producing up to 5-million tonnes per annum.
“Other projects on the horizon may be the restart of Tim Tebeila’s coal mining operation in the Waterberg coalfield in Limpopo — with an estimated 30-billion tonnes of coal reserves — announced on May 26 2025.”
Thungela’s South African portfolio is in transition with the closure of select operations where coal reserves have reached the end of their economic life.
The JSE-listed group’s Elders life extension project was completed last year for R1.8bn and it expects total aggregate expansionary capex of R2.5bn for the Zibulo north shaft extension project.
Exxaro said last year it will spend R5.2bn on a life-of-mine extension at its Matla colliery.
Supply-side dynamics
The IEA report notes that supply-side dynamics in South Africa are shaped by infrastructure and investment decisions.
“Rail performance has improved after Transnet implemented recovery measures and allowed private operators onto its network, which could add up to 10-million tonnes per annum of export capacity over the next three years,” it said.
“The government’s financial guarantee recovery plan has stabilised Transnet’s finances, reducing operational risk. Mining companies such as Thungela reported higher output in the first half of the year, supported by better rail availability.
Gradual decline
“However, long-term policy signals point to a gradual decline: the Integrated Resource Plan 2025 targets the decommissioning of 8GW of coal-fired capacity by 2030 and prioritises renewables, which may discourage new coal mine investment. Sasol’s decision to maintain Secunda coal-to-liquids output and secure internal coal supply suggests some stability in production in the medium term.”
The agency forecasts South African coal production at 228-million tonnes in 2030, trending flat as logistics reforms partly offset the structural decline in investment.
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