There was a shock revelation at the Fossil Fuel Foundation conference in Johannesburg last week when coal fundi Xavier Prevost told the meeting that top-quality South African coal was no longer a sought-after commodity on world markets.
Coal was once the darling of global markets, but Prevost revealed that local coal-mining companies were finding it hard to sell the premier RB1 coal range and, in any event, the formal coal grading arrangements of the past had all but lost their relevance.
South Africa’s current coal export markets, like India, the Middle East and Africa, are after the cheaper low-grade coal and not the top grade, which is raises the question: How best should South Africa use the premier-quality coal that the global market is spurning?
This is a touchy subject because, for some time now, South Africa has earned more foreign exchange from coal exports than from any other commodity.
But, in the current low-priced environment, would it not be better to make a complete about-turn and start using this high- heat-value coal locally?
The traditional pattern has been for South Africa to export its top grades and keep the low grades for Eskom, which uses a mountain of coal and which needs to continue doing so.
Sasol looks after itself with its own suite of coal mines, which needs to engage more transparently when it comes to coal.
By contrast, Eskom has no coal mines of its own and is no longer keen to keep up the cost-plus arrangements it has traditionally had with private-sector coal mining companies.
Instead, it wants to invite tenders for coal and keep itself at arm’s length from coal companies.
The problem is that, while all this is going on, observers see a dangerous coal shortage building up on the horizon, which they like to refer to as “the coal cliff”.
Certain parties who have tried to take action to prevent this by drawing up a coal roadmap have not succeeded in doing so and information promised on South Africa’s coal resources from the Council for Geoscience has not been forthcoming.
The hard reality is that there is no other country in the world that relies on coal more than South Africa.
Yet, this vital commodity finds itself in a policy vacuum, which prompts one to revise that celebrated football-related Bill Shankly quote and apply it to coal, which comes out something like this: “Some people think that coal is a matter of life and death, but, I assure you, it’s far more serious than that.”