How can South Africa balance the demand for its abundant coal supplies with the global just energy transition?

12 May 2022: Spirits were high going into day three of the 2022 Mining Indaba, where delegates were enlightened by insights from representatives of some of the continent’s leading mining conglomerates, as well as political leaders such as the Prime Minister of the Democratic Republic of Congo, H.E. Jean-Michel Sama Lukonde Kyenge. Reporting on the highlights of the day was Forvis Mazars National Head of Mining and Audit Partner, Thinus De Vries who homed in on the issue of South Africa’s abundant coal supplies and the juxtaposition of this reality with the global move towards renewable energy.

His opinion on this topic was that, “leaders and decision-makers in the South African mining sector are faced with a unique and daunting challenge that involves navigating the tricky terrain between the global call for cleaner energy and the opportunities that our country’s coal resources present in terms of job creation and community development. The welfare of thousands of South Africans hangs in the balance. Industry players need to therefore steer clear of the tendency to oversimplify what is a very complex and convoluted issue,” explains De Vries.

This topic was discussed in one of the Mining Indaba’s most engaging panel discussions on day three, entitled: “The Just Transition and the Future of Coal in Africa.” Of particular interest was the boom in demand for South African coal that is being fueled by the Russia-Ukraine conflict. Attempts to supply this demand have been thwarted by South Africa’s defective railway system and its inability to deliver coal to ports across the country in the most environmentally sound way. For coal miners, this increased demand represents a welcomed reprieve from losses incurred as a result of failing infrastructure, but again, transport challenges continue to prevent the sector from optimizing the opportunity.

“In the current war in Europe and its connection to South Africa’s coal supply, we see a unique geopolitical dimension to the call for cleaner energy and simultaneously, South Africa’s post-pandemic economic recovery. The solutions here, are far from straight-forward. When we talk about coal mining, we need to consider the ecosystem that exists around this natural resousrce. To tear it down completely and abruptly would have far-reaching socioeconomic consequences. For this reason, government and the mining sector need to work towards finding a sustainable middle-ground that will serve both the country’s economic objectives and the just energy transition,” elaborated De Vries.

De Vries argues that solutions to South Africa’s challenges around energy need to be framed within an economic context as well as a social context in order to provide the public and industry stakeholders with a “full view of the bigger picture.”

Arguably, as De Vries suggests, part of the solution lies in investing in research and development. Essentially, the move to ‘cleaner coal,’ has catalyzed the emergence of a completely new sub-sector – one that represents the future of energy for South Africa and the world. For foreign investors who are being called upon to turn their attention to the African continent, this constitutes a new opportunity to focus on technological innovation as an economically lucrative aspect of development for the industry as a whole.

As De Vries concludes: “Issues surrounding South Africa’s coal industry are dominating discourse at this pivotal point in our history. But alongside those discussions, we need to encourage a dual focus on research and development, and how the public and private sectors can work together to empower African innovators to invent solutions that will put the continent on the map as we charter new territory in the global energy space.”

*This article appeared on EBnet here.

18/05/2022