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Importance of the Coal Mining Industry in South Africa

The WOW report on The Coal Mining industry in South Africa makes it abundantly clear that the coal mining industry is important for the South African economy, important enough to dispel the notion that coal mining should be stopped at the expense of energy security and economic progress. This is not to diminish the importance of a just energy transition toward greener renewable energy solutions to reduce pollution. The coal mining industry has been a significant source of revenue for the South African government, with coal exports being a major contributor to the country’s foreign exchange earnings while the industry pays taxes, royalties and other fees to the government. With coal still accounting for around 70% of the country’s electricity generation, which drives industrial development and economic growth, this industry is a lifeline of the South African economy.

Coal as a source of energy transition

Since coal is considered a “dirty” energy source, and South Africa is still very reliant on coal as a source of energy, it is important to look at greenhouse gas emissions and where South Africa features as a polluter on a world scale as country and per capita. The graphs below illustrate this. Although they reflect 2018 figures, the relative numbers have not changed.

1. Top emitters of Greenhouse Gas Emissions (2018)

2. Greenhouse Gas Emissions per Capita (2018)

Source: CO2 Highlights (International Energy Agency 2021)

It is clear from the information above that South Africa is NOT among the worst polluters neither on a national scale nor on an individual scale basis.

Coal to renewable energy in South Africa

Undeniably, energy generation is the biggest source of pollution as it accounts for about 72% of man-made greenhouse gas emissions, therefore policy changes have focused primarily on electricity generation, as well as transportation as major contributors.

A just transition away from coal is a reasonable argument. It must however be weighed against socio-economic feasibility and must be comprehensively assessed for the country. It is fair to state that the pressing transition targets should fall on the highest polluters.

Just energy transition principles

Ironically, the largest member of the EU, Germany, has chosen not to follow rational thought and has caved into eco-zealots on many fronts. Firstly, it has decided      to close its nuclear power stations when nuclear is considered one of the lowest polluters and most efficient and reliable electricity generators. Secondly, it has reopened some of its mothballed coal-fired power plants due to the Russia-Ukraine war and consequential gas energy shortage. That is incidentally one of the reasons      why South Africa’s coal exports shot up in 2022, as illustrated in the graph.

coal exports south africa

For ease of reference the table with the various energy sources and their greenhouse gas emissions is reproduced here:

just energy transition and energy technologies
Energy technologies: Comparison of direct emissions (Red bars) and full-life-cycle emissions (Blue bars)

Just energy transition, activism and economic development

Coal mining concerns include the following:

  • The burning of coal causes air pollution and disturbs large areas during mining
  • It causes various environmental challenges including soil erosion, dust and water and noise pollution

The coal mining industry is however still a big contributor to the fiscus, social development and job creation – all important aspects to the country’s socio-economic development.

As stated in the WOW report, there is pressure from the public and financial institutions to scale back funding of coal mining projects. The four largest South African banks’ position is however that they cannot withdraw all funding immediately due to the important role coal mining plays in South Africa’s energy security and labour market. This is a well-considered stance.

Government should be encouraging the use of clean coal technologies that have been developed to mitigate the environmental impact of energy generation using coal. 

The Department of Minerals and Energy (DMRE) needs to fast-track its application processes. It was reported in the media that slow government processes, including delays in the approval of permits and mining rights transfers, and the issuing of water-use licences and environmental permits, prevented projects estimated at about R20bn from commencing development.

It has become apparent that there is a need for collaborative efforts by all sectors of society, including individual actions such as reducing energy consumption, recycling, and using public transportation, in order to make a significant impact.

How does the coal mining industry impact politics? 

The new forms of imperialism and colonialism are identified in the use of trade and finance as a lever by developed nations to achieve their own goals. It is not inconceivable to envision that trade restrictions in respect of exports to developed nations might be imposed on countries that do not transition in accordance with the developed nations’ agendas. Equally, finance might be subject to the same pressure. In South Africa, this has become concrete with the R8.5bn grants and loans promised on condition of an inconsiderate fast-paced energy transition, not taking into account SA’s circumstances.

The future of coal in South Africa

The use of trade and finance as a lever by developed nations to achieve their own goals comes across as disingenuous given where most pollution comes from. South Africa should be allowed to take a balanced approach in phasing out coal mines to protect its economy.

Australian company Whitehaven Coal said: “Decarbonisation is necessary, but it must take place in a responsible and coordinated way and we continue to maintain that this is a journey that will take decades, not years. Traditional energy sources like coal are critical to providing a reliable baseload of energy.” 

It seems that South Africa is finally doing exactly that, announcing a rational energy policy of extending coal-fired power stations’ life to catch up with the energy shortfall. South Africa still has to maintain sufficient baseload capacity, and the next wave of power generation from renewables with a low energy availability factor cannot by itself provide that solution. Reliable and available electricity is needed to grow the economy.

The WOW report outlines the many applications of coal besides energy generation, and there are thousands of different products have coal or coal by-products as components. 

Products with coal or coal by-products include: 

  • Soap;
  • Aspirin;
  • Solvents;
  • Dyes;
  • Plastics;
  • Activated carbon and carbon fibre; and 
  • Fibres such as rayon and nylon.

So while coal may become less prominent as a source of energy, it will remain an important resource for all its uses and contribution to the economy.

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