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Coal shortage not a problem in South Africa
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16th March 2012
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South Africa does not have a shortage of coal but its ability to build power stations fast enough to service the growing demand for energy is an increasing problem, says minerals industry consultant Venmyn Rand.

The general availability of coal is not an issue in South Africa as the country hosts numerous deposits that provide it with great potential to grow its contribution to the global coal industry.

Many coalfields, such as the Soutspanberg and Waterberg coalfields, in Limpopo, have not been exploited to their full potential yet, explains Venmyn Rand director Neil McKenna.

The Soutspanberg coalfield is a hotbed of activity at the moment and has local and export coking coal potential as well as steam coal potential, which is necessary for power generation.

Many of the deeper coalfields could be potential sources of coal-bed methane, which is a primary energy source of natural gas.

However, South Africa’s single biggest potential for growth in the steam coal indus- try lies in the Waterberg coalfield, which consists largely of untapped resources.

The Waterberg coalfield is currently being explored by a number of exploration and mining companies for steam coal and metal- lurgical coal.

“Current insufficient water and rail infrastructure inhibits the Waterberg’s potential to become an enormous contributor to South Africa’s coal market,” says McKenna.

Water is necessary for mining and processing, while improved rail and road infrastructure is necessary for producers to transport the coal to power stations and ports.

Mining Weekly has reported the view, by Transnet coal division GM Divyesh Kalan, that the State-owned logistics provider is able to unlock 23-million tons of coal a year from the emerging Waterberg coalfield, and that the timeline is 2016/17.

Further, in his State of the Nation address in February, President Jacob Zuma committed to improving the infrastructure in this region.

The Grootgeluk colliery is, currently, the only operating mine in the Waterberg and is the sole supplier to the Matimba power station, which is the areas’ only power station.

State-owned power utility Eskom is currently building the Medupi coal-fired power station, in Lephalale, Limpopo, which will also be supplied coal from Grootgeluk.

The planned operational life of this station is 50 years. Medupi is the first baseload coal-fired station to be built in South Africa in over 20 years.

Eskom says that the “worst-case scenario” for delivering initial power to the grid is September 2013.

The energy crisis in South Africa has created the perception that there is going to be a long-term demand for coal in the country and in Southern Africa.

All of the known coal deposits in South Africa have been explored to some extent, but the focus is shifting to undeveloped coalfields such as the Waterberg and the Soutpansberg, as the principal coalfields such as the Witbank and Highveld coalfields are approaching their productive limits.

“South Africa is highly constrained in terms of its ability to generate power and there is no doubt that more power stations will have to be built,” says McKenna.

“Given South Africa’s large coal resources, it makes sense for these stations to be principally coal fired,” he adds.

“However, alternative energy sources, such as nuclear and renewable-energy sources, could still have a significant future role to play and should be considered to offset the overreliance on coal and to diversify the country’s energy supplies.”

A challenge faced by the coal industry is infrastructure and capacity constraints.

South Africa is at a point where it has overexceeded its capacity in terms of using mainly road, rail and port infrastructure to bring new coalfields into play.

Another challenge is uncertainty regarding mining policy.

“The threat of nationalisation is discouraging significant investment in the country,” states McKenna

As coal is a strategic mineral, some form of resource nationalism can be expected. This could be beneficial to the country, as it would secure local supply but could persuade investors to invest in other regions, he adds.

A possible approach to deal with governments ‘need’ for strategic nationalism would be to encourage coal producers to voluntarily sell some of their low-grade coal locally instead of exporting it. This could be done through State interventions, such as higher taxes on exported products or other incentives in securing local markets, says McKenna

The perception of security-of-tenure risk is another challenge in the coal industry.

“There is uncertainty about mining companies’ ability to keep and renew mineral rights, even though much of this uncertainty may be unfounded and the Department of Mineral Resources is taking certain aggressive steps to fight this perception,” says McKenna.

Lastly, he says, the coal-mining industry has a bad reputation regarding responsible mining and environmental management. This is another challenge that needs to be overcome.

“As a result, there are going to be increasing challenges for new mines, which will be necessary to grow South Africa’s power- producing potential.”

“Going forward, attention needs to be paid to more responsible mining methods so that the country can continue to feed its energy demand responsibly,” says McKenna.

Edited by: Tracy Hancock


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NEIL McKENNA Current insufficient water and rail infrastructure inhibits the Waterberg’s potential to become an enormous contributor to South Africa’s coal market

NEIL McKENNA Current insufficient water and rail infrastructure inhibits the Waterberg’s potential to become an enormous contributor to South Africa’s coal market