Africa Mining: Coal remains a main source of energy in the continent

coal Mocambique_releaseCoal will maintain its status as a robust, baseload energy source for the foreseeable future in Africa, says South Africa-based diversified resources company Exxaro coaloperations executive head Dr Nombasa Tsengwa, who tells Mining Weekly that coal is cheap and that more than 1 600 coal-fired powerplants are being built worldwide.

“Coal remains a key commodity for the Exxaro group. We have assessed the resource from every angle and considered all its possibilities. We believe it is the fuel that the organisation will continue to use to power itself, and the country, for the foreseeable future – in a consciously sustainable manner,” she stresses.

Exxaro currently has R18-billion worth of expansion projects, including sustaining capital in the pipeline, over the next five years, with seven coal projects under way – four in Limpopo and three in Mpumalanga.

The company’s greenfield project, the Belfast coal mine, in Mpumalanga, has broken ground, while the 2.7-million-tonne-a-year life extension project at Leeuwpan, also in Mpumalanga, is in progress. The Grootegeluk 6 expansion project and load-out station construction activities are well under way at the Grootegeluk complex, in the Limpopo Waterberg district municipality.

Tsengwa points out that South Africa is currently a coal-driven economy and, consequently, government’s proposed transition to a low-carbon economy should take into account socioeconomic factors, poverty and sustainable development.

“Government’s Integrated Resource Plan for Electricity 2010-2030 forecasts that coal will continue to be a significant part of South Africa’s energy mix, with renewable energycontributing up to 42% of new electricity generation capacities in South Africa over the next 20 years.”

Investment Imperatives
While Exxaro is a significant investor in the coal sector, Tsengwa believes that strict environmental regulation in South Africa impacts negatively on investor appetite to fund coal projects. However, the biggest policy framework that has had a negative impact on mining is the uncertainty regarding the controversial Mining Charter III and its implementation, she says.

“The mining rights application process is long and clarity is needed on the new Mining Charter on black economic- empowerment requirements, as well as other nonfriendly regulatory issues,” she says, noting that the Chamber of Mines and the new government administration are “tackling the issue”.

Tsengwa further maintains that rail infrastructure and capacity are important factors in getting the coal to exportmarkets. “We have a good partnership with the State- owned rail company Transnet and, last year, we concluded a long-term rail agreement with the company to expand rail capacity in Lephalale, Limpopo, to accommodate the Grootegeluk 6 expansion.

With parts of South Africa facing water shortages, waterremains a critical input in mining, she adds. Consequently, Exxaro is assessing various ways of using its water more effectively and reducing portable water use at its operations.

Clean Energy
The National Development Plan outlines the necessity to accelerate the formation of independent power producers (IPPs) to alleviate South Africa’s baseload power generation challenges, and Exxaro is open to these opportunities, as well as to increasing its supply of coal to State-owned power utility Eskom. However, Exxaro remains focused on assisting in developing alternative sources of energy, says Tsengwa.

She highlights that the development of such sources is in line with government’s Renewable Energy Independent PowerProducer Procurement Programme.

“The 50:50 joint venture with Indian power utility company Tata Power is one such example of clean energy, which resulted in Cennergi being created as an IPP to motivate the generation of clean, zero-emission wind energy farms.”

Tsengwa says, although coal remains Exxaro’s primary business commodity, as a purpose-driven business, it “is exploring other opportunities to develop, prioritise, fund and commercialise new business in a rapid stage-gate governed process that will impact positively on people’s lives”.

“In anticipation of potential threats to coal mining, we are looking at renewable energy solutions, in addition to our Cennergi investment, to find new ways of generating and supplying energy, and managing energy consumption,” she adds.

Meanwhile, Tsengwa indicates that a key objective of Exxaro’s wind energy farm projects has been the employment of local labour and skills transfer.

Exxaro is constantly reviewing its policies to attract and retain the best talent and embrace new technologies that will help employees contribute and add value to the company, she

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