JOHANNESBURG (miningweekly.com) – With the Covid-19 pandemic having created the biggest global crisis in generations by sending shockwaves through health systems, economies and societies around the world, XMP Consulting senior coal analyst Xavier Prevost says the implications of the pandemic for energy systems and clean energy transitions are still evolving.
With governments and economies dependent on a responsible coal industry being in place to support energy demand and infrastructure, now and in the future, for economic recovery, Prevost said that “electricity security and resilient energy systems are more indispensable than ever for modern societies”.
The transition to clean energy “must be at the center of economic recovery and stimulus plans”, he stressed.
However, the energy sector has also been severely affected by the coronavirus crisis, which has disrupted transport, trade and economic activity across the globe.
According to XMP’s 'Global Energy Review 2020', countries in full lockdown are experiencing an average of 25% decline in energy demand per week, and countries in partial lockdown are experiencing an average 18% decline.
Meanwhile, rapid recovery prospects in South Africa’s mining sector appear bleak, even as the industry started to recoup some lost production and sales as restrictions began easing in May, Prevost lamented during his presentation during the virtual Coal Industry Day.
Prevost referred to statistics from the Minerals Council South Africa, which, last week, said additional damage had been done by Covid-19 to the mining industry which had already been in structural decline in 2019.
According to data from Statistics South Africa, mining production decreased by 29.8% year-on-year in May, with coal output declining 9.6%. However, the data shows a recovery trend, with seasonally adjusted mining production up 44% in May. This reversal comes after two consecutive month-on-month declines of 36.8% and 19.3% in April and March, respectively.
While there are signs of hope, Prevost lamented that there were also signs that the “South African coal industry looks like it is at the end of its life”, especially considering that closed mines may only reopen when, and if, market prices improve.
In this regard, he noted that South Africa’s export prices could get a small boost from stronger Indian demand but, overall, sentiment remains bleak for both seaborne and domestic markets.
Despite this pick-up in demand, South African producers remain pessimistic about export and domestic prices for the rest of this year, as the fallout from Covid-19 continues to hit demand, both at domestic and international levels.