Mining in focus
sector, it also created another 170 000
indirect jobs.
Despite their many environmental
benefits, renewable energy projects
unfortunately just don’t carry the same
weight when it comes to sustainable
job creation. How many people are,
for example, employed in a solar plant?
The other question is, how “green” are
renewables like wind turbines really?
The real conundrum in South Africa,
nevertheless, is that the coal mining
space has opened a lot of opportunities
for emerging black people who couldn’t
be a part of the mining community not
too long ago. Although it’s a fallacy to
proclaim that coal mining is easy, it is,
nonetheless, not overly costly drilling for
a shallow coal deposit. Furthermore, coal
mining can be extremely lucrative, and
is the ideal stepping stone for a junior or
emerging miner trying to get their foot
in the door. With an abundance of coal
waiting to be unearthed, would it be fair to
deny them the opportunity to enter such a
benign sector?
Congested space
Global production on the rise
South Africa is ideally situated to take
advantage of this projected growth
in demand. At the same time, global
production is expected to increase only
slightly, which will be of interest to the
growing list of new entrants to the South
African coal mining sector.
According to data and analytics company
GlobalData, world coal production is set
to grow exponentially until 2022, despite
major players scaling down capacities.
Although Germany, the UK, US, Canada
and Ukraine are phasing out domestic
coal production capacity, expansion of
production capacity in countries such as
India and Indonesia is predicted to generate
modest annual growth of 1.3% in coal
production over the next four years, with
output reaching 7.6 billion tonnes in 2022.
Production in India, Indonesia and
Australia is forecast to grow at respective
compound annual growth rates (CAGRs)
of 10.9%, 3.9%, and 2.3% between 2018
and 2022, with the high growth in India
helping to reduce the country’s reliance on
imports to feed its expanding coal-fired
power generation.
Vinneth Bajaj, senior mining analyst
at GlobalData, says that coal production
has yet to reached historic levels, despite
growth in 2017 and 2018. “Several mining
companies have withdrawn, either partially
or completely, from the coal business. These
include China’s Yanzhou Coal, which has
disposed of five coal projects in the last five
years, and Nacco Industries, POSCO, CNX
Resources who have collectively scaled back
their coal assets by almost 50%. Rio Tinto,
BHP and Vale have also sold almost all of
their coal assets with the former completely
exiting coal production,” he says.
Bajaj adds that there are more than
300 coal projects that could come online
between 2019 and 2022. Of these, 92 are
currently under construction with the
remainder at various stages of development.
Of the total, 57 are in Australia, 55 in India,
54 in China, 30 in South Africa, 18 each in
Canada and Indonesia and 15 in the US.
“The impact of these commencements
will be marginally offset by over 100 coal
projects expected to phase out over the
same period, including 34 in India, 15 in
China, 14 in South Africa and 13 each in
the US and Australia,” says Bajaj.
The importance of coal in Africa
When Mining Mirror interviewed
Benjamin Sporton, the CEO of the World
Coal Association last year, he told us that
Asia is the biggest growing coal market
in the world, while the European and
US markets are declining. According to
Sporton, coal will play an increasingly
important role in the development of the
African continent.
“Coal will provide substantial export
opportunity, especially in southern African
countries, and at the same time mining is
really important for economic development
and job creation. It contributes to the
development of skills and the local
communities in general, and in addition,
brings in taxes for the government,” he said.
Most of South Africa’s coal was
historically exported to the European
market. With that market in decline though,
the country has become a prime exporter to
India and a growing market in South East
Asia, which bodes well for its future.
The rest of Africa is also a potential
market for especially South African
coal. Coal provides the most affordable
and reliable source of electricity on the
Amid calls for more clean energy,
shenanigans at Eskom, and majors
shunning coal, the junior coal mining
sector in South Africa has almost
surreptitiously become a congested space.
New junior and mid-tier companies like
Black Royalty Minerals, Canyon Coal,
Wescoal, MC Mining and Sibambene are
on the cusp of breaking into the big league.
Furthermore, as the Anglo and South 32
stars fade, bright new ones like Exxaro and
Seriti are shining bright, while old stalwarts
like Glencore and Sasol look stable.
Despite the seemingly unsurmountable
challenges at the new power stations
Medupi and Kusile, and the fact that many
are nearing their sell by date, South Africa
still has a large fleet of coal fired power
stations that will guzzle up tonnes of black
gold in the short and medium term.
Although the traditional coal fields like
Witbank in Mpumalanga, and KwaZulu
Natal, will provide the bulk of it, new coal
fields like Bronkhorstspruit in Gauteng,
and Makhado and the Waterberg in
the Limpopo province, host significant
deposits for both export and domestic
use. Despite reports to the contrary, there
is still a huge appetite for coal globally,
with especially India and Asia driving the
demand. According to the Global Coal
Plant Tracker Portal, 1600 coal plants
are planned or under construction in 62
different countries around the world, which
will expand the world’s coal-fired power
capacity by 43%.
According to the Global Coal Plant tracker, 1600 coal plants are currently being planned or under construction in 62 countries.
[20] MINING MIRROR JULY 2019
www.miningmirror.co.za