New reserves and mines will be needed to supply coal exports through the Richards Bay Coal Terminal (RBCT) and to the inland industry, mainly for power generation and other local users in South Africa.
He predicts that exports to the country’s main market, Europe, will continue to be the main source of revenue for the South African coal industry. The Far and Middle East markets also offer potential areas for growth, provided a reason is found to facilitate the export of larger volumes of coal there.
“A number of Indian companies currently seeking partnerships or seeking to invest in South Africa’s coal industry to assist their country in obtaining more South African coal to burn in India might provide that reason,” suggests Prevost.
Meanwhile, he postulates that environmental laws, in the country and elsewhere, should not become an obstacle for the industry to achieve its future goals. South Africa should also cooperate with its neighbouring countries to use their coal resources, either for power generation or for use in the metallurgical industry.
Nevertheless, new coal combustible technologies should be imple- mented to suppress emissions, complying with more stringent environmental laws, says Prevost.
Reflecting on the past year, Prevost says that 2006 coal activities were focused on two main issues, namely the RBCT’s new expanded capacity and Eskom’s needs for about 70-million tons a year more for the future generation of electricity. He says that the plan for more coal-fired power generation for the grid has already assisted in the approval of a new megamine project and is driving plans by the smaller mines to sell their nonexportable production as local steam coal. The RBCT Phase V project has resulted in the resurrection and birth of about 30 coal projects. The expansion will become effective by mid-2009.
In 2006, 66,5-million tons of coal was exported through the RBCT. The throughput of the other two terminals, Durban and Maputo, was 1,3-million tons and 1-million tons each.
South Africa’s coal was exported to 28 countries, of which 88% was exported to the European Union of which Great Britain, Spain, France, the Netherlands, Italy, Germany, Denmark and Belgium were the largest customers. South Africa’s coal exports to Europe increased, while exports to the Middle and the Far East decreased to 7%. Prevost says that there is a prospect that South African steam coal exports to Asia might increase again as growing demand for South African coal is being experienced from India.
Of the 245-million tons of coal sold during 2006, about 28%, worth some R21,5-billion, was exported at an average price of R314 a ton, which is about 3,4 times higher than the average inland price. The remaining 72% sold inland was worth R16,2-billion. The electricity sector consumed 108,7-million tons and the synthetic fuels sector used 43,7-million tons. The industrial sector, including mining, consumed 10,4-million tons, the metallurgical industry 5,7-million tons and merchants bought 8,4-million tons.
Coal also continued to be the world’s fastest-growing fuel, with a year-on-year 4,5% consumption increase from 2005.
According to the International Energy Agency, world hard coal continued to show strong growth in 2006 after three years of record growth. Total world hard coal production reached 5 369,8-million tons, which is an 8,8% increase over the 2005 level of 4 934-million tons, which follows three years of strong annual growth, averaging 8,3%.
Between the major producing countries, production increased in China, Russia, India, Indonesia, Kazakhstan, Vietnam and Colombia. During the last three years, the Organisation for Economic Co-operation and Development (OECD) countries’ hard coal production steadily increased and reached a new production peak of 1 510,1-million tons in 2006. The US and Australia are the main drivers of this increase, together with Turkey, Norway, Mexico and New Zealand, where much smaller increases in production took place. Meanwhile, most of the other OECD countries experienced declining production, especially Germany, the UK, Poland and Canada.
South Africa’s production also decreased by 0,2-million tons, or 0,1%, while exports decreased by 2,7-million tons, or 3,8%. However, owing to very high international prices, revenue increased by R590-million, or 2,8%.
While the country’s production decreased, run-of-mine (ROM) coal production was 312,5-million tons. This is 6,5-million tons more than in 2005. About 245-million tons of this production was of saleable quality. Witbank Coalfield remains the highest producer, followed by the Highveld Coalfield, both of which are located in the Central Basin. The coalfields produced more than 80% of the country’s total output for 2006.
In 2006, Mpumlanga’s total coal production, consisting of 50 mines, represented more than 84% of the total ROM coal, while Limpopo province’s two mines produced 8%. The Free State’s two mines produced 7%, while Kwazulu-Natal’s six remaining mines produced 0,8%.
Opencast mines provided 53% of the ROM production during 2006, while bord-and-pillar mining provided 38%, stoping 5% and longwall 3%. The ten largest collieries, with an output of more than 12-million tons a year each, produced 204-million tons, 22 middle-sized mines, with an output of more than 2-million tons a year, produced 87-million tons and 28 small mines, with less than 2-million tons a year, produced 21-million tons. The five anthracite collieries produced 2,3-million tons.
In 2006, mines controlled by the five largest mining groups, Anglo Coal, BHP Billiton, Sasol, Exxaro and Xstrata, supplied almost 90% of South Africa’s saleable coal production. Coal mines discarded 70-million tons of waste or unsaleable coal.
“With the establishment of black economic-empowerment (BEE) mining companies, such as Exxaro, Shanduka and African Rainbow Minerals, a greater shift to BEE ownership is expected,” Prevost concludes.