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South Africa’s coal mining industry facing numerous challenges

15th March 2013

By: Anine Kilian

Contributing Editor Online

  

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The South African coal mining industry is facing several challenges, the most significant being railway capacity constraints hindering the transportation of coal to the Richards Bay Coal Terminal (RBCT), where it is shipped to the export market, says Frost & Sullivan industrial automation, mining and manufacturing research analyst Yeukayi Kadzere.

She explains that the terminal transported six-million tons of coal in 2012, which was less than its capacity of 91-million tons, resulting in South Africa losing vast amounts of potential export revenue.

“Transportation and logistics constraints increase the costs of freight, which, ultimately, increase the final selling price, making South Africa’s coal exports potentially uncompeti-tive in international markets.

“In addition, the coal mining industry is faced with depleting coal deposits and a decline in the quality of coal resources. Some mines have failed to secure long-term supply contracts and have to rely on the spot market,” she says.

Kadzere adds that the mining, transport and combustion of coal also pose several health and environmental threats, contrib-uting to water and air pollution.

She states that inadequate water supplies, housing, and road and rail linkages in the Waterberg coal basin, coupled with difficult geological conditions, are likely to restrain the large-scale mining activities in the area in the short to medium term.

“In 2011, South Africa was the seventh-largest coal-producing country worldwide, with an estimated 8.3-billion tons of market-able coal reserves. “The country earned R87.8-billion from coal sales,” she says.

However, in the last decade, South Africa’s coal production was stagnant at approxi-mately 240-million tons a year, owing to depleting mine reserves, declining coal recov-ery grades and increasing operating costs.

“South Africa exports 25% of its yearly coal output, with Asia being South Africa’s main export market. It accounted for 60% of coal exports in 2011,” notes Kadzere.

She points out that, going forward, increas-ing coal consumption for energy generation by State-owned utility Eskom will help grow the coal sector revenues.

“Eskom’s capacity expansion programme is expected to add 17 120 MW to current production by 2018. “Increasing demand from the Asian market, particularly China, will also stimulate growth in the industry. Metallurgical coal production in South Africa is also expected to increase, from an output of 5-million tons a year in 2011 to 12-million tons a year by 2020,” Kadzere states.


Trends and Technology
Kadzere says there is a growing market for low-grade coal from Asia, with some local producers choosing to export instead of sell- ing to the local market, where there is estab-lished demand from Eskom.

“South Africa’s coal deposits are relatively shallow with thick seams, compared with other coal mining countries. This makes it easier and less expensive to mine. Owing to a decline in high-quality reserves in recent years, there has been an increased push by the industry to upgrade industry technologies and, ultimately, extend the life of major coal deposits,” she notes.

Kadzere points out that certain companies have identified the unique opportunity in Africa to use the binderless coal briquetting technology.

“This technology allows coal mines to upgrade discarded thermal coal fines into compacted, transportable and useable briquettes of significantly higher value. This represents significant economic and environ-mental opportunities for the South African coal mining industry.”

“It is estimated that South Africa has dis-carded coal fines deposits of about two-billion tons a year, generating about 60-million tons of coal fines each year from its mining operations,” she explains.

Meanwhile, modern technology in coal min- ing increases the safety of workers and enables mine planners to map mines efficiently, monitor orebodies, and track output volumes and productivity more accurately.

Kadzere adds that dragline operators, for instance, can simply glance at an in-cab dis-play and see the position of the bucket and tub relative to the design plan.

“Workers can easily assess whether each dig point is above or below plan, which helps to move material accurately and efficiently. Machine stability data is also available on the cab display, enabling operators to identify potential problems and act quickly to prevent failures,” she says.

Value of Industry
Kadzere notes that the coal industry employed an estimated 74 000 people and paid R14.1-billion in wages in 2010.

The industry also provides 92.8% of the country’s energy requirements.

“Coal sales earned the country R65.3-billion in 2009, R69.5-billion in 2010 and R87.8-billion in 2011. “The industry competes closely with platinum, the country’s top-earning mineral resource,” Kadzere explains.

She adds that the electricity crisis in South Africa in the first quarter of 2008 highlighted the need to not only expand the country’s baseload power-supply capacity, but also deliver adequate coal supplies to the power generating plants.

“Following the announcement of Eskom’s build programme, mining companies also announced their plans to build new coal mines, expand the existing ones, extend the existing shafts and procure new coal mining and handling equipment.

“Capital expenditure in the coal mining industry will increase from $5 031-billion, which was allocated for 2009 to 2013, to $8 100-billion during 2014 to 2020,” she states.

Kadzere adds that technological advance-ments have made coal mining more pro-ductive.

“This is especially applicable to surface mining, in which technology enables miners to remove the overburden as quickly and as safely as possible,” she says.

Further, in keeping up with the technology, and extracting coal as efficiently as possible, mining personnel must be highly skilled and well trained in the use of complex, modern instruments and equipment, Kadzere adds.

Edited by Megan van Wyngaardt
Creamer Media Contributing Editor Online

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