Coal still has role to play despite naysayers, Menar MD tells conference

15th August 2023 By: Cameron Mackay - Creamer Media Senior Online Writer

Coal still has role to play despite naysayers, Menar MD tells conference

Menar MD Vuslat Bayoglu

Resources investment company Menar MD Vuslat Bayoglu has emphasised that South Africa is on the precipice of a significant industrial revolution.

Fuelling this revolution, however, will require a consistent and reliable baseload power source that can only be produced by coal-fired power stations, despite calls from more developed countries for South Africa to reduce its coal-fired power station capacity to achieve sustainability and carbon dioxide emission reduction goals, he said on the first day of the Southern African Coal Processing Society International Coal Conference, in Secunda, Mpumalanga, on August 15.

He pointed to the impact of Russia's war, in Ukraine, on the prices of food, energy and other commodities globally.

“We have this overlapping crisis affecting many parts of Africa in terms of energy security, including reversing the positive trends in terms of improving access to modern energy. There are also difficulties in terms of access to utilities in different African countries.

"There are about 1.3-billion people globally without electricity, and about 600-million of those people are from sub–Saharan Africa,” he said.

Bayoglu also noted that, according to the International Energy Agency, about $2.8-trillion would be spent on energy this year, with about $1.7-trillion to be spent on renewable-energy initiatives and about $1-trillion on unabated fossil fuel power.

Bayoglu discussed the impact that a lack of energy security in South Africa has had, noting that the amount of loadshedding experienced this year had eclipsed that of previous years.

This loadshedding will cost the country up to R1.6-trillion and lead to job losses, he stated.

“We have around the highest unemployment rate in the world, around 33%, and about 75% among the youth. This is unsustainable. The United Nations Development Programme warned South Africa that loadshedding is a ticking time bomb. We saw in the looting that happened in KwaZulu-Natal in July 2021, most of the people who were part of that looting were jobless.

"We have a massive gap between the poor and the rich and we have addressed none of this. To create and maintain jobs, we need economic growth,” he told delegates at the conference.

Owing to the abundance of important minerals South Africa has – such as platinum, coal, chrome, manganese and others – it is vital to use and process these resources locally to generate income and create jobs, he added.

Owing to the importance of energy security for economic growth, Bayoglu argued that decisions by government to close down coal-fired power stations, and therefore remove baseload power needed for the local power grid, could be detrimental.

This has occured at power stations such as Komati, which has recently been refurbished to include wind, solar photovoltaic (PV) and battery energy storage capacity.

He noted that renewable-energy sources such as solar PV and wind generation alone would not be sufficient to provide enough power without the baseload power being provided by coal.

This is owing to concerns about solar PV and wind only being able to produce power at certain times of the day. This can be mitigated by battery energy storage, but the cost of such technologies is currently expensive, he said.

This comes in addition to concerns about acquiring the necessary minerals to build batteries used for energy storage.

He added that South Africa was also not geographically in a position to buy much excess power from its neighbours.

South Africa currently exports about 70-million to 80-million tons a year of coal.

This stands in contrast to countries such as Australia and Indonesia, which have recently increased their coal exports from 100-million tonnes to 300-million tonnes a year and 100-million tonnes to 700-million tonnes a year, respectively.

“People in our industry are moving to countries such as Australia and Canada because they get better job offers. Why are they offered better jobs? These countries need skills, as many as possible because they have massive growth in most of their mining [sectors], but especially coal,” he said.

He also pointed out that as South Africa continues to export coal, the Asian market will be crucial for the country to supply to.

“About two-thirds of coal-fired power stations are in Asia. And then the average age of those coal stations is 13 years. They're quite young, and Asia's going to be a key market for our coal. Globally there's a trend that coal's facing down, but it's not out.”

To export coal efficiently, Bayoglu emphasised the need for State-owned rail company Transnet to address its infrastructure challenges and do more to maintain its locomotive fleet so that coal and other commodities can be moved on the rail network.

Bayoglu highlighted that the volume of coal being transported by road had increased from about 617-million tonnes in 2016 to about 839-million tonnes in 2022.

This compares with rail shipments of coal, which decreased from about 77-million tonnes in 2017 to about 50.4-million tonnes last year.

The challenges experienced by Transnet Freight Rail have slowed rail shipments from local mines to the Richards Bay Coal Terminal and may have cost up to R150-billion in lost export sales for 2022, Bayoglu said.