SA’s coal industry has a lifeline now that the government’s energy portfolio is under Gwede Mantashe, the mineral resources and energy minister.
In his new cabinet, President Cyril Ramaphosa recombined energy and mineral resources and Mantashe sees a longer role for coal in SA’s energy mix as the country grapples with energy shortages and soaring electricity costs.
Stressing the point at the Junior Indaba mining conference in Johannesburg, Mantashe said it would be a mistake to focus on renewable energy at the expense of coal, and he urged coal miners and energy companies to find and exploit clean coal technology.
The government was seeking solutions to the “biggest threat to the economy”, which was the security of electricity supply, he said.
Eskom has debt of more than R400bn and, in February and March, implemented damaging power cuts, removing up to four gigawatts (GW) of power supply at a time, damaging the economy.
SA’s GDP contracted by an unexpected 3.2% during the first quarter of the year, led by an 8.8% fall in the manufacturing sector, with a 10.8% contraction in the mining sector.
“We need sanity in the coal versus renewables debate… This is not about killing coal and growing renewables. It can’t be. That’s a silly debate,” Mantashe said.
“It’s about promoting various technologies at our disposal and ensuring there is a combination and co-existence of the various technologies. If we approach it that way, then the debate becomes more sane,” he said.
“Changing the debate to energy supply security would be broader than just coal and renewables.”
Financial institutions, namely Standard Bank, Nedbank and FirstRand, have all said they will not fund the coal-fired Thabametsi or Khanyisa power plants to be built by independent power producers, EE Publishers has reported. This follows a global trend of financial institutions not wanting to invest in polluting technologies, but rather focus on sustainable, renewable energy sources.
The ANC’s head of economic transformation, Enoch Godongwana, told Carte Blanche that the decision by the banks gave weight to the party’s thinking around potentially forcing pension funds to invest in development projects that would benefit the country’s economy.
The unpromulgated Integrated Resources Plan (IRP), which maps out SA’s energy mix, envisions the country using coal up to 2030, replacing the polluting technology with alternative sources of electricity.
Mantashe said the energy portfolio was brand new to him but he was aware of the IRP because it had been brought to cabinet meetings by his predecessor, Jeff Radebe.
The draft IRP was tabled in August 2018 for public comment and an updated version was issued in March 2019, noting that “coal still plays an integral part of the energy mix”.
The IRP outlined coal-fired energy supplying 46% of SA’s energy mix by 2030, with growing supply from solar, hydro and wind sources. As it stands now, coal-fired power plants have installed capacity of 38GW compared with the 14GW coming from alternative sources, including gas- and diesel-fired turbines.
“Our vast coal deposits cannot be sterilised simply because we have not exploited technological innovations to use them,” the March version of the IRP said.
Eskom, will decommission 12GW of electricity generation by 2030 as it closes old energy plants. The new Medupi and Kusile power plants under construction and commissioning will provide 5GW and the Thabametsi and Khanyisa plants will provide 1GW, according to the IRP, giving a total coal-fired installed capacity of 33.85GW by 2030.
The state-run Council for Geoscience was preparing to conduct a pilot project on carbon capture and storage.
“They will do it faster if they work with you,” Mantashe told 250 delegates at the conference.
Petrol sector boost for economy
The department of mineral resources and energy would hive off the oil and gas elements of the Mineral and Petroleum Resources Development Act in the next three months.
“It’s in the final stages. We are going to take it to parliament very soon,” Mantashe said.
“When the petroleum sector does well, the growth of the economy will be significantly higher.”
Xavier Prevost, the senior coal analyst at XMP Consulting, said the coal sector produced more revenue than the gold and platinum sectors. He has said there were many decades of coal supply available in SA.
The IRP does not account for any new nuclear projects in addition to the Koeberg plant that has 1.8GW of capacity and which the government plans to run for another 20 years.
Mantashe, however, said nuclear should play a role in SA’s energy mix.
“Just because we suspended nuclear plans because the Russian deal was going to be corrupt, does that mean we must throw away a technology that is necessary for development? My own view is that let’s bring back a debate that is about energy supply security,” he said.
Former president Jacob Zuma was a key supporter of a R1-trillion deal with Russia, pushing his ministers hard to conclude the transaction. However, a court challenge in 2017 brought by environmental activists resulted in the deal being binned.
“We are not opening discussions on nuclear, we are discussing the energy mix of our country,” he said.
“You can’t exclude any technology … and that includes nuclear.
“South Africans are extreme by nature, it’s this one or nothing. It’s a weakness on our part when we are a developing economy that must be exposed to a mixture of technologies that can sustain ourselves.”