Factors that hinder and favour coal mining in South Africa
FACTORS HINDERING COAL MINING IN SOUTH AFRICA
- REDUCED DEMAND Negative views on coal and its environmental impact have resulted in a major decline in its use by the major economies of the world. Because of coal’s contribution to greenhouse gas (GHG) emissions, many countries have put in place strict environmental laws which have affected demand for coal. Renewable energy sources (wind, solar, hydroelectric, hydrogen and fuel cells) are beginning to take the place of fossil-based energy sources.
- POLICY AND REGULATORY FACTORS The proposed carbon tax will affect all coal users and reduce the competitiveness of South Africa’s producers.
- ACCESS TO CAPITAL The enacting of environmental laws around the world has seen less and less credit being extended to the construction of coal power plants. The World Bank and the International Monetary Fund are reluctant to fund utilities and governments that want to build coal power plants. Eskom is one example. Since 2009, net investment in the coal industry has declined at a rate of 10% per year – from R7.3 billion to R3.8 billion in 2017.
- ELECTRICITY SUPPLY Developments at Eskom, the South African national electricity supplier, have affected the sustainability and reliability of supply.
- INADEQUATE INFRASTRUCTURE The lack of rail and water infrastructure are the main challenges in the development of new coal mines in the Greater Waterberg area and this is currently limiting investment in coal mining in the area. South Africa’s water scarcity means there is a lack of water infrastructure such as dams and canals
- LAND ACCESS Mining competes with other sectors such as agriculture and manufacturing for land use.
FACTORS FAVOURING COAL MINING IN SOUTH AFRICA
- Coal is currently the cheapest baseload technology in South Africa. (ie the cheapest way to meet the minimum level of demand on an electrical grid over a span of time.) South Africa currently has limited alternative solutions for reasonably-priced power other than coal. The industry believes coal can and should remain part of the energy mix.
- Clean coal technologies have been developed which will enable South Africa’s move towards a greener future. These technologies include HELE (high efficiency, low emission); beneficiation of discarded coal resources for power generation; underground coal gasification (UCG); and carbon capture storage (CCS). The coal industry believes that this can be done in a way and within a timeframe that can enhance the competitiveness of the South African economy.
- South Africa's coal regions are well known and well explored – knowledge of the area is extensive.
- South Africa has large coal reserves and resources. Companies invest heavily in innovation and skills training to build an even greater understanding of the resource base and how to mine it.
- Coal mining in South Africa is a well-established industry with technical skills.