SA coal to dominate as African demand expands
Forecast change in SA’s coal exports by 2030
The rapid growth in demand for coal in Africa over the next decade could see South Africa in a position to capitalise on this opportunity.
South Africa’s current export of 4 million tons per year to Africa was expected to expand to 38 million tons by 2030, with the continent becoming the country’s largest export market, Noble Group’s head of energy coal analysis, Rodrigo Echeverri, said during the South African Coal Export conference held in Cape Town.
Last year’s total coal exports of 73 million tons would increase to 80 million tons by 2020, and remain at that level for the following 10 years, while South Africa’s current 37 million tons of coal exported to India and Pakistan would decrease to 8 million tons by 2030 in the wake of increasing African and Middle Eastern demand.
Middle Eastern demand was predicted to rise from 4 million tons in 2016 to 26 million tons over the next 13 years.
Echeverri said his calculations were based on new power station builds already signed for Africa.
There was a “high probability” of 20 gigawatts of commissioned power on the continent coming to fruition and South Africa was in a prime position to ship the required coal from Richard’s Bay to countries such as Senegal, Nigeria and Tanzania.
“All it requires is for each country to develop 1GW, that’s enough,” said Echeverri. “It’s going to happen, demographics and economics support the model. It’s a clear scenario.”
He said South Africa and Colombia were the only coal-producing nations with the reserves and the 16mt 6mt Total 2016: 73mt Total 2030: 80mt potential for new mines to supply the expected rise in global coal demand from its current 900 million tons to 1 200 million tons by 2030.
“We [South Africa] are in a position of power, we’re the only ones with reserves, so why do we give it away?”
Given a continued growth in demand for coal in India, which in 2016 accounted for half of South Africa’s exports, and dwindling reserves from its current suppliers, South Africa could “call the shots” regarding South Asia imports. “It’s our market, we won’t have to fight pricing.”
However, he said he believed policy in South Africa was not geared to take advantage of future leverage on the global market. “[South Africa’s] policy is passive,” said Echeverri.
However, he said it was not “too bad”. “I’ve seen worse. I just don’t understand Eskom.”
Deputy director-general of mineral policy and promotion Joel Raphela, who spoke in Mineral Resources Minister Mosebenzi Zwane’s stead, said South Africa produced 94% of the continent’s coal, and as coal in the Mpumalanga basin was dwindling, the government was committed to exploiting the Waterberg basin in Limpopo.
Raphela said the Waterberg basin was targeted for large-scale infrastructural development in order to unlock its “vast potential”.
The drive to “introduce a significant number of black industrialists” in the sector and commitment to support “junior miners”, who made up 25% of South Africa’s coal production in 2015, so that they would not be “perpetually junior”, would continue.
He said this would be done through Eskom’s procurement power, as the parastatal procured about two-thirds of the 180 tons of coal sold internally.
The acting general manager for fuel sourcing at Eskom, Ayanda Nteta, echoed Raphela’s commitment to market transformation and to ensuring “our coal spend is on black-owned companies”.
Nteta said industry needed to work with Eskom to ensure more new entrants in the sector, “especially black women, youth and the disabled so that we can have a more robust industry”.
She said the Request for Proposals for the Mpumalanga-based Kusile power station, expected to enter commercial operation in the second half of this year, would be issued before July. It would involve millions of tons, she said.