Coal industry in crisis

Thousands of jobs are at risk in the coal industry, which is in a state of crisis, according to a new study by the University of Cape Town (UCT).

The report noted that the crisis was affecting power utility Eskom’s electricity prices which, according to the report, increased by 300% over the last 20 years.

“This massive increase in costs has put Eskom under increasing financial pressure and contributed to their current financial position,” said principal researcher Jesse Burton of UCT’s Energy Research Centre. “Rising coal costs, coupled with cost overruns at Medupi and Kusile, have left Eskom with little option than to hike tariffs which, in turn, obviously hurts consumers.”

An industry consultant, who did not want to be named for strategic reasons, told The Citizen the coal industry was currently facing a “huge crisis”, which he described as preventable and completely unnecessary.

The consultant blamed constant government and union interference over the past two decades, as a result of politically motivated “ideology policy shifts”, corruption, greed and underqualified officials appointed to government institutions.

He also said the crisis had almost completely devastated both the coal and electricity generating industry.

A transition from coal to alternative energy resources was already underway in South Africa and the closure of coal plants and mines was inevitable, the report found.

“There is no question that the changing face of the South African energy landscape will have an effect on jobs in the coal mining and coal-fired energy sector.

“What matters is how the department of energy and related ministries find a way to deal with the inevitable,” said Burton.

The study was part of a global report into coal transition strategies and was coordinated by the France-based Institute for Sustainable Development and International Relations, and London-based Climate Strategies.

The report also found that new renewable energy capacity is considerably cheaper than either the Eskom coal-fired power plants that are currently under construction, such as Medupi or Kusile, or the privately owned coal plants proposed in the 2018 Integrated Resource Plan which was released last month for public comment.

The changing face of the energy landscape will have an effect on jobs in the coal industry.

Jesse Burton Principal researcher Energy Research Centre