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Towards a just transition
South Africa is a country well-endowed with mineral resources, and coal is abundant. Over many generations, the coal industry has provided a substantial foundation for the industrial development of the country.
In 2020, the country produced 252 million tonnes of coal, generating sales of R133 billion. The coal industry is the biggest in the mining sector in South Africa, accounting for more than 24% in terms of production volumes (weighted).
Around 36% of this value was exported, generating valuable foreign exchange for the country. Royalties alone from coal mining paid to the fiscus amounted to around R1.7 billion.
The coal industry employed 91,000 people in 2020, who in turn earned around R1.7 billion. We know that employees play an important role in supporting their families and other dependants, and in their communities and the local economy. Importantly, employees in the coal sector tend to be more skilled than other mining sectors (as there tends to be more mechanisation in coal mining), and are consequently better paid.
Seriti Coal and Seriti Power together, will be responsible for around 32% of Eskom’s annual coal supply. Seriti also produces coal for domestic consumption and export markets.
Coal remains the most viable baseload energy source for South Africa in the near term, and is an integral part of the country’s Integrated Resource Plan, most recently updated in 2019. This plan underpins the National Development Plan, and envisages South Africa’s energy sector will provide reliable and efficient energy service at competitive rates; that is socially equitable through expanded access to energy at affordable tariffs; and that is environmentally sustainable through reduced emissions and pollution. Specifically, the most recently promulgated IRP 2010–2030 identified the preferred generation technology required to meet expected demand growth up to 2030, incorporating government’s objectives such as affordable electricity, reduced greenhouse gas (GHG) emissions, reduced water consumption, diversified electricity generation sources, localisation and regional development.
At the same time, South Africa is a signatory to the Paris Agreement on Climate Change and has ratified the agreement. The energy sector contributes close to 80% towards the country’s total GHG emissions of which 50% are from electricity generation and liquid fuel production alone. Currently, South Africa’s emissions are expected to peak, plateau and from year 2025 decline, and every effort is being made to meet the commitments made.
SA Coal production 2020
SA coal sales 2020
SA coal mining royalties 2020
SA coal industry employs
Export proportion 2020
South Africa will continue to depend on coal for perhaps another 60 years. Eskom has 16 coal-fired power stations, and some of them will continue to exist for up to 35 more years.
Where does that leave Seriti, as a major supplier to Eskom?
First and foremost, we are not climate change denialists. Climate change and global warming are scientifically proven facts that we recognise and believe need to be addressed.
We recognise that the coal that we mine contributes to global warming and climate change.
We believe that our response must be considered, it must be innovative, and it must be just. A just and responsible transition to a less carbon intensive economy and a less carbon intensive world is therefore an imperative that we face and support as a company, and – we believe – as an industry and a country.
There is no doubt that the level of South Africa’s coal-dependence must and will reduce significantly as we usher in renewables and other forms of energy generation.
That being said, a just and responsible transition has to be managed properly.
Some years ago 95% of the country’s energy mix originated in fossil fuels. We are now down to below 80%. The 30-year integrated Resource Plan (IRP) will take this down to 40%. The other sources will need to be solar, wind, hydro, nuclear and other clean forms of energy. This change must be embraced by all even though it is daunting.
Coal-fired power stations must and will begin to shut down.
How then, will we manage a just and responsible transition?
- Many of these power stations will need to be transformed, or retrofitted, into delivering other forms of power, given that the infrastructure is already there.
- Coal mining jobs may be lost but may be shifted to other kinds of jobs.
- And, until all the coal-fired power stations have disappeared, we need to ensure that technologies are developed and introduced to reduce carbon emissions from those power stations that already exist.
- Recently developed coal-fired power stations globally are equipped with technologies that better manage the negative effects on our environment. Old coal fired power stations can be retrofitted with technologies to manage carbon emissions. Technologies like Carbon Capture Utilisation and Storage are being extensively investigated and researched. A Polish power station is the first in the world to use supercritical CFB (Supercritical Circulating Fluidised Bed) which puts out extremely low emissions. The World Coal Association and the ASEAN Centre for Energy are collaborating to support the advancement of clean coal technologies in the ASEAN Region.
Through innovation and forward thinking, we can and will find ways to responsibly utilise our resources.
Keeping the lights on
By providing coal of the quality required by Eskom’s power stations at a cost sustainable to our business and fair to Eskom, Seriti is playing its part in keeping South Africa’s lights on at the optimal price for the consumer.