The endorsement of the National Development Plan (NDP) may have an impact on South Africa’s coal mining industry, says Norton Rose industrial and mining lawyer Brandon Irsigler.

He states that the NDP identifies issues that miners are facing and areas of possible improvement, whether they be legislative or infrastructural.

“There are issues on which the coal mining sector, in particular, would want to engage with government to understand its thinking regarding the NDP,” Irsigler says.

He explains that issues that may affect coal miners in terms of the NDP, are the notion of certain minerals being strategic resources and being locally beneficiated.

“Should coal, for example, be deemed a strategic mineral, this could affect the coal mining industry. There is a perception in government and in State-owned power utility Eskom that coal miners are washing coal more aggressively, to make otherwise Eskom-bound coal suitable for export markets,” Irsigler notes.

He adds that India uses lower-grade thermal coal, and Eskom and India share the lower-grade thermal coal market.

“Many coal washing plants have been built to make coal that was previously reserved for Eskom usable for export.

“Eskom, in its rapid power generation plant-building phase, is going to require coal and there may be competing interests,” Irsigler points out.

“We export between 58-million and 63-million tons of coal a year. Richards Bay Coal Terminal is a dedicated coal export terminal and it is a big earner of forex for South Africa and contributor to the fiscus, as well as a creator of wealth and jobs,” Irsigler says.

He adds that it is a relatively stable industry and more accessible than most mining ventures to smaller-scale miners and black economic-empowerment involvement, as it does not have large overheads, compared with other mining operations requiring smelters or deep underground excavation or rock drilling.

With finance readily available and more of it obtainable than in other mining sectors, coal mining in South Africa is an attractive proposition, particularly when taking into account that the necessary infrastructure is already in place.

“It is a relatively accessible industry, which means that creating uncertainty or adding a potential impediment might cause people who would otherwise have financed these operations to pause for thought,” Irsigler warns.

Meanwhile, the development of the Waterberg coalfield, in the Ellisras basin, in Limpopo, is an exciting new development in the industry.

“It will be a carefully balanced operation, as there are environmental issues that need to be considered and expensive infrastructure needs to be developed,” he notes.

Irsigler adds that another exciting development is the responsible development of a fracking industry.

“The promise of energy independence is too great not to merit serious investigation,” he says.

Another opportunity for South African coal miners would be to use their abilities, expertise and skills and develop coal mining operations in neighbouring countries, including Mozambique, Zimbabwe and Botswana, to achieve growth, Irsigler adds.

He states that the global coal-supply market is fractured and large coal mining countries generally produce for their own benefit.

“India and China are large coal producers for their own use. South Africa’s main competitors are Columbia and Indonesia and other coal exporting nations. “South Africa has a pretty good reputation in terms of quality, reliability and infrastructure and delivery,” Irsigler concludes.