Coal-to-liquid (CTL) and underground coal gasification (UCG) projects are set to become more important in the South African coal mining landscape and gain more prominence in the industry, forecasts professional services firm Venmyn Deloitte.

Investors and mining companies need to think laterally to ensure the survival of South Africa’s coal market and its top projects in the current climate, where alternative energy sources and unconventional gas are gaining popularity.

“It will be survival of the fittest”, says Venmyn Deloitte mining advisory manager and coal specialist Liz de Klerk.

She tells Mining Weekly that the coal industry will need “a facelift to remain relevant in future”, pointing out that major players are considering the exploitation of unconventional gas sources, such as coal-bed methane, shale gas and UCG.

This is owing not only to the changing laws and regulations regarding carbon emissions but also to the fact that remaining resources are lower quality and are more technically challenging to mine. The companies and people that best understand the need to reduce these carbon emissions can pioneer and develop new technologies, De Klerk explains.

De Klerk highlights that the larger mining houses have invested significant time and money in curbing their carbon emissions and are most favourably positioned to shift in the way coal is mined and the technology used, citing diversified miner Exxaro and petrochemicals major Sasol as prime examples.

“Exxaro aims to be carbon neutral by 2030 and Sasol has initiated its Project 2050 that aims to convert 60% of its conventional coal mines to CTL operations, where coal is first mined and then turned to gas,” De Klerk elaborates.

Sasol’s project includes four new mines in Mpumalanga – Thubelisha, Impumelelo, Shondoni and Tweedraai – using new and modern technologies that will replace current dwindling operations, such as Bosjesspruit, Twistdraai, Brandspruit and Middelbult, as well as part of the Syferfontein project, also in Mpumalanga.

The Shondoni project, which is progressing well, has extractable reserves estimated at about 190-million tons. The mine will deliver 10.5-million tons a year of streaming coal when in full production. The Impumelelo project, which is scheduled to replace the old Brandspruit mine, involves the construction of a new 8.5-million-ton-a-year coal mine, which is upgradeable to 10.5-million tons a year.

De Klerk further highlights UCG as one of the major new methods of tapping into South Africa’s coal reserves, noting that major coal players are investigating their potential UCG assets.

Diversification is also a key trend in combining the use of fossil fuels and power generation suppliers. For example, Exxaro is investigating other power generation suppliers, such as independent power producers and power supplier Tata Power, of India, for renewable energy, as well as energy company Linc Energy for UCG, she explains.

“Project developers must invest in alternative methods of mining coal and converting it to energy. This includes clean coal technology, which, although not that new, is still considered an unknown by many people, with methods, such as hydraulic fracturing, or fracking, presenting many other environmental challenges, not just carbon emissions.”

Burning Bright
De Klerk cites mining major Glencore’s Tweefontein optimisation project and Sasol’s CTL-related projects as some of the most promising top coal projects in the current economic climate.

The Tweefontein mine will mine pillars from the old underground operations using low-cost opencast methods.

“Glencore spent R8.213-billion on this project that is scheduled to produce 7.9-million saleable tons a year,” De Klerk says, adding that 75% will be exported and the remainder will be allocated to State-owned power utility Eskom.

Mining Weekly reported in May that the project, which was on schedule and within budget, “delivered a low-cost, long-life brownfield expansion that has elevated the operation near Ogies into a modern, predominantly opencast operation that mines the rich pillar reserves left behind in discontinued underground workings”.

With regard to t

he Sasol Project 2050 initiative, which includes Impumelelo and Shondoni, De Klerk says these projects are significant to the future of energy generation, as they will result in coal being converted to gas – a future trend in coal use globally, owing to its cleaner technology.

“ . . . Sasol is well aware of the critical need to tap into the about 34-billion tons of recoverable coal reserves still in South Africa, which is why it is prepared to focus on CTL projects, as well as the more favoured and less capital-intensive gas-to-liquid ventures in countries such as the US,” she avers.

While CTL still has a negative environmental impact, Sasol intends to make its plants more efficient by reducing the carbon emissions of those plants built before 2020 by 20% and those built before 2030 by 30%, De Klerk adds.

Sasol is also investigating the feasibility of its low-cost Waterberg coal assets that are being developed in a joint venture with Exxaro, but reported in its 2015 annual integrated report that this is on hold until 2017, owing to the weak oil price.

De Klerk, however, notes that many existing mines and coal-fired power stations remain limited by their outdated engineering and machinery.

“In contrast, new and smaller projects, mostly owned by junior mining companies, are in a good position to optimise on the changing coal landscape where the new carbon tax laws can be embraced from the onset by using modern technology or mining the coal for synthetic natural gas,” she suggests.