SA coal to dom­i­nate as African de­mand ex­pands

Fore­cast change in SA’s coal ex­ports by 2030

CityPress - - Business And Tenders & Auctions - STEVE KRET­Z­MANN busi­ness@city­press.co.za

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.

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