Search for new coal deposits must be intensified
as big mines’ reserves deplete – Prevost

4th June 2010 By: Megan van Wyngaardt - Creamer Media Contributing Editor Online

With a number of big collieries due to close around 2020 as coal reserves are depleted, efforts to discover new deposits should be intensified, a commentator has said.

This would provide junior coal miners with a platform to venture into undeveloped coalfields, changing the structure of the industry, which is largely controlled by big companies, XMP Consulting senior coal analyst Xavier Prevost said at the Fossil Fuel Foundation of Africa’s Junior Coal Mining Ventures V conference, held in Johannesburg last week.

“Small mines are rapidly replacing the previous megamines which produced most of the coal in the past. The importance of small mines is now emerging, with a recorded 3,2% production of coal in 2009,” he said.

However, as coal is a bulk commodity, smaller mines will be faced with their own challenges, including increased handling, processing and transportation costs, and shorter operating lines. Infrastructure constraints will also prove challenging to such mines, as they are often located far from main export sites.

Prevost said that the past year and the beginning of 2010 were an exciting time for the South African coal industry. The need for more coal for power generation had increased the inland consumption of coal in 2008, 2009 and 2010, and demand for increased exports and increased capacity at the Richards Bay coal terminal (RBCT), after implementation of Phase V, should also further increase South African exports.

The Phase V expansion project, which would cater for an expansion of 19-million tons a year, was divided into three elements: four-million tons a year would be allocated to emerging black economic-empowerment miners with modest export volumes, six-million tons a year would be allocated to the South Dunes coal terminal and nine-million tons a year would be allocated to miners through a subscription process. 
This would increase the RBCT’s throughput capacity from 72-million tons a year to 91-million tons a year.

Prevost said that the need for additional exports was driven by international market demand, which, in Europe, was currently low. 
Coal exports, previously a high priority for most South African coal companies, were now competing with local markets, which had become active.

He added that the Asian market was once more opening up to South African steam coal, as a result of a great need for this energy source in this region.