Most coal production in South Africa – about 53% – is from opencast mines, with the balance being produced by bord-and-pillar (40%), stoping (4%) and longwall mining (3%). Coal-mining operations are clustered in the country’s Mpumalanga province, accounting for over 84% of South Africa’s coal production. The remaining output comes from the Limpopo province’s two operating mines – Grootgeluk, in the Waterberg coalfield, and Tshikondeni, in the Soutpansberg coalfield – the Free State’s New Vaal and Sigma collieries, and KwaZulu-Natal’s six anthracite operations.

Since 2003, South Africa’s coal production has remained fairly stagnant at levels of around 240-million tons a year, posting only small increases at best. This stagnation has been attributed to depleted coal mines in the Witbank, Ermelo and Highveld coalfields, in Mpumalanga province, as well as operational and technological constraints that coal miners have been facing. Geology has determined that the Witbank coalfield is by far the most significant source of South Africa’s mined coal at present.

The Waterberg deposits, which extend into Botswana, however, are widely expected to become the country’s main future coal resource, particularly as this is the region expected to become home to many of the next-generation thermal power stations. Over 80% of South Africa’s saleable coal production is from mines controlled by five mining companies – Anglo Coal, BHP Billiton Energy Coal South Africa (Becsa), Exxaro Resources, Sasol Mining and Xstrata Coal South Africa. However, empowered mining companies and junior miners with black economic- empowerment (BEE) partners are playing an ever-increasing and influential role in the sector.

For instance, Exxaro Resources, one of the big five coal miners, is the largest BEE mining company in South Africa. In addition, Anglo Coal, Sasol Mining and Xstrata Coal South Africa are involved in joint ventures (JVs) with BEE mining companies. The rise of BEE companies and junior miners has been facilitated by the Mineral and Petroleum Resources Development Act (MPRDA) and the disposal of noncore coal-mining assets by the larger industry players.

Consumption
Coal has traditionally dominated the energy supply sector in South Africa, accounting for 61% of local coal sales in 2007. According to the Energy Information Agency, in the US, coal provides about 88% of South Africa’s total primary energy and accounts for 93% of the country’s electricity generation.

The importance of coal in power gene- ration was made abundantly clear in January 2008, when low coal stocks, together with poor coal quality, wet coal and technical problems plunged South Africa into a power supply crisis. At the height of the crisis, coal stockpiles at Eskom’s power stations had declined to a low of ten days and mines and other energy-intensive industries were compelled to decrease their power consumption by 10%. While coal had played a central role in the crisis, it would be the intense focus on increasing coal supply that would see the country out of its power supply crisis.

Eskom required an additional 45-million tons over a two-year period to rebuild its emergency stockpiles. By late January 2009, the power utility had increased its coal stockpiles to an average of 38,7 days, with none of its power stations having coal stockpiles of below 20 days. In addition, Eskom had brought extra capacity on line in 2008. All eight units at the Camden power station had been brought back to full operation, while two units of the Grootvlei power station and one unit at the Komati power station had been synchronised to the national grid, as part of the power utility’s return-to-service programme.

Eskom has initiated a capacity build programme. In addition to the three mothballed power stations that have been brought back on stream, the power utility is building two new coal-fired power stations. In April 2008, Eskom started construction of the Medupi power station, located near Lephalale, in Limpopo. Medupi will be South Africa’s first greenfield coalfired power station to be built in more than 20 years. The first unit is scheduled for completion in 2012, with the entire station to be operational by 2015. Medupi will have an installed capacity of 4 800 MW.

Exxaro Resources signed a coal supply agreement with Eskom in September 2008 to supply the new baseload power station. In terms of the agreement, Exxaro Resources’ Grootegeluk mine will supply 14,6-million tons a year of power-station-grade coal for a period of 40 years.

In addition to the Medupi project, there is also the Kusile power station, which is situated close to the Kendal power station, in the Witbank area of Mpumalanga. Eskom plans to have Kusile’s first 803-MW unit in commercial operation by 2013, with the subsequent five units being commissioned at eight-month intervals. The last unit is expected to enter commercial operation in 2017. The power utility signed a letter of intent with Anglo Coal in August 2008 to supply the Kusile power station with thermal coal at a rate of 17-million tons a year for a period of 47 years.

The combined consumption of the three recommissioned plants and the two new coal-fired power stations under construction could raise Eskom’s coal use by over 50- million tons, assuming these power stations use the average amount of coal burned by the power utility’s existing power stations in 2007.

South Africa’s major coal producers – Anglo Coal, Becsa, Exxaro Resources, and Xstrata Coal South Africa in JV with African Rainbow Minerals (Arm) Coal and junior miners – are focused on meeting Eskom’s increasing coal demands. Exxaro Resources, the largest supplier to the State power utility, supplied 36,3-million tons to Eskom in the 2008 calendar year. Similarly, Anglo Coal’s collieries deliver 35-million tons of thermal coal a year to Eskom, while Arm has initiated negotiations with Eskom with a view to increasing thermal coal sales to the utility.

In addition, Exxaro Resources is investing R9-billion in the brownfield expan- sion of its Grootegeluk operation, which will supply Eskom’s Medupi power station with 14,6-million tons a year. Anglo Inyosi Coal’s New Largo project, located in the vicinity of Eskom’s Kusile power station, is being developed to meet the new power station’s anticipated coal requirements. Arm envisages supplying the domestic thermal coal market, of which Eskom is the largest consumer, with 3,6-million tons a year from its Goedegevonden project, which is expected to be fully operational by 2011.

Another significant inland coal user is the synthetic fuels sector, which is dominated by Sasol. The company uses over 40- million tons of coal a year, or 25% of local sales. Sasol is largely self-sufficient with regard to the provision of coal feedstock for the production of synthetic fuels and other chemicals. Sasol Mining’s Secunda mines supply Sasol Synfuels’ coal-to-liquids plant at Secunda, while Sigma collieries’ Mooikraal mine supplies utility coal to Sasol Infrachem’s facility at Sasolburg. In addition, Sasol buys five-million tons of coal a year from Anglo Coal’s Isibonelo mine, as part of a 20-year external pur- chasing agreement, which will continue to 2025.

South Africa’s metallurgical industry, which is dominated by ArcelorMittal South Africa (AMSA), uses about six-million tons of coal a year, or 3% of local sales. The company sources its coal supplies from local producers and imports the balance.

In addition to buying hard coking coal from Exxaro Resources – South Africa’s main coking coal producer – AMSA acquired its parent company’s 16,3% stake in coal- mining company Coal of Africa Limited (CoAL) for R404,5-million. The steel producer indicated that the transaction would secure part of its future coal needs and would mitigate one of the company’s key variable input costs. Further, as part of the deal, AMSA has the option of entering into an offtake agreement with CoAL for the supply of 2,5-million tons a year of metallurgical coal from the coal miner’s proposed Vele colliery. Coal is also supplied to the industrial sector, which includes the brick-making, cement, paper, sugar and textile industries.

Coal Exports
South Africa exports coal to 34 countries, of which 84,5% is destined for Europe, where the UK, Spain, France, Italy and Germany are the biggest customers; however, demand is decreasing in this region. In Asia, exports have increased by 403%, driven by increased energy needs in the region. Market commentators expect that, owing to decreased demand and high shipping costs, exports to Europe will continue to decline but that the Asian market will make up for the shortfall created by Europe.

Black Economic Empowerment
BEE has transformed the coal-mining sector. In 2002, two years before the intro- duction of the MPRDA, black econo- mically empowered companies mined about 10% of South Africa’s coal production. However, the number of BEE coal miners increased from two in 2002 to 29 in 2008, with these companies responsible for almost 50% of the country’s coal production.
The increased prominence of BEE companies in the sector can be attributed to two factors – changes in the mining legislative framework and the nature of coal mining in South Africa. Mining companies holding unused reserves, and those that have shut down unprofitable operations, run the risk of losing the rights to these mineral resources and mining operations as a result of the MPRDA’s use-it-or-lose-it principle.

To prevent this from happening, the main participants in the industry have freed up coal deposits deemed uneconomical to mine and have made noncore assets available to BEE companies. The large coal producers have been eager to enter into JVs with BEE companies or to facilitate the purchase of equity in their companies by BEE groups, as ownership of 26% of these companies by historically disadvantaged South Africans is a pre- requisite for the conversion of old-order mining rights to new-order mining rights. In addition, the granting of prospecting and mining rights for new projects is dependent on mining companies meeting Mining Charter BEE ownership requirements.

While the MPRDA and the Mining Charter have facilitated the emergence of BEE mining companies and enriched a select few, concerns have been raised by non- governmental organisations over the limited positive impact the new mining legislation has had on the local communities where mining is taking place.

Research conducted by the Bench Marks Foundation suggests that mining sector empowerment initiatives to date have not been sufficiently broad-based. It appears that those that have acquired equity in the large mining houses or the emerging junior miners have benefited significantly from BEE.

However, communities in which mining is taking place have been unable to access the economic rewards associated with these mining operations. Further, for some communities, the only tangible benefits received from mining have come from a few well-structured corporate social responsibility programmes initiated by some mining companies. Existing BEE coal-mining companies include Exxaro Resources, Arm Coal, Anglo Inyosi Coal, Igoda Coal, Shanduka Coal, Mmakau Mining, Endulwini Resources, Optimum Coal Holdings and Siyanda Resources.

Clean Coal Technologies in South Africa
Coal is currently South Africa’s primary energy source and, as a result, the country is one of the world’s most ‘emissions inten- sive’ economies, emitting about 400- million tons of carbon dioxide (CO₂) a year, which represents about 1% of global emissions.

While Eskom’s coal-fired power sta- tions may be the source of most of South Africa’s CO2_{, the country’s synthetic fuels and petrochemicals industry, which is dominated by Sasol, is also a heavy CO2 emitter. Since coal will remain South Africa’s most important energy source for the foreseeable future, efforts are under way to develop effective methods of reducing the country’s CO2 emissions.}

According to the World Coal Institute, over 90% of greenhouse-gas emissions from coal occur during combustion. A range of interventions, known as clean- coal technologies, are being developed and, in certain instances, have already been employed in the effort to mitigate the environmental consequences of coal combustion. South Africa’s remaining coal reserves are generally of a lower quality, with higher ash content, than the coal that has been mined over the past three decades. Clean-coal technologies have the potential to optimise this coal and the large quantities of discard coal for economic and energy purposes through beneficiation.

Pulverised Coal Combustion
According to the former Department of Minerals and Energy (DME), the efficiency of coal-fired power stations in power gene- ration is deemed critical in determining whether excess greenhouse gas is emitted into the environment. Therefore, increasing power station efficiency will result in reduced greenhouse-gas emission.

The efficiency of coal-fired power stations can be increased through a technology known as pulverised coal combustion, which involves the combustion of a cloud of finely ground coal particles. Further, higher efficiencies and lower emissions have been achieved through increasing operating temperatures and pressures of existing steam cycles.

Carbon Capture and Storage
Clean-coal technologies, such as post- combustion pollutant capture and carbon capture and storage (CCS), are being developed and employed to mitigate the environmental impact of greenhouse gases and other air pollutants emitted during coal combustion. The former DME reports that post-combustion technologies have been developed to capture pollutants released during power generation.

These technologies include electrostatic precipitators and low nitrogen oxide (NOx) burners for the removal of NOx, and flue gas desulphurisation for the elimination of SOx. Further, CCS involves preventing CO₂ produced through combustion from entering the atmosphere and then storing it underground in deep-seated porous rock strata on land or similar strata under the seabed. Research is under way in South Africa to determine the feasibility of CCS.

The South African National Energy Research Institute has established the Centre for Carbon Capture and Storage, which will start working towards its vision of having a CCS demonstration plant operational in the country by 2020. However, much work has still to be done before the Centre for Carbon Capture and Storage can begin work on the demonstration plant. Preparatory work includes the compilation of a carbon storage atlas, which will illustrate the distribution and ranking of potential geological CO₂ storage reservoirs in South Africa and other factors that may have a bearing on storage feasibility. Thereafter, research will begin on the CO₂ geological injection test, which will give scientists the opportunity to study how stored CO₂ reacts with South Africa’s geological formations. The injection test is expected to be completed by 2016.