CAPE TOWN (miningweekly.com) – Junior mining companies cannot perpetually remain as junior miners, they must be supported by the majors and other industry stakeholders to assist them in their growth journey, says Department of Mineral Resources (DMR) mineral policy and promotion deputy director-general Joel Raphela.
He was speaking at the IHS Markit’s 2017 South African Coal Export Conference, in Cape Town, on Thursday. Raphela added that the empowerment of junior miners was crucial to ensuring the broader transformation of South Africa’s mining industry landscape.
Raphela said that the State would continue to use its procurement power, in the form of Eskom, which is the main consumer of coal in the country, and other State-owned entities, to support the development of junior mining companies to implement socioeconomic transformation in a “measured manner”.
He noted that in 2015, the junior coal mining sector contributed 25% of total coal production in the country.
COAL EMPHASIS
Raphela highlighted that South Africa had abundant coal reserves, which remained the country’s “most reliable and cost competitive energy source”. He stated that the importance of coal to the country’s energy mix and its role in supporting all business sectors in South Africa could not be understated.
Raphela commented that coal contributed about 90% of electricity generation, 30% of liquid fuel stockfeeds and 70% of the country’s primary energy needs. In 2015, the South African coal industry employed 15% of the country’s total mining workforce and was its largest revenue generator of all mining segments.
He also highlighted that South Africa was the largest coal producing nation in Africa, accounting for 94% of all coal produced on the continent and was the seventh biggest producer globally and that government intended to support the industry to ensure that it could improve its global ranking, which was also dependent on the industry’s global market fundamentals.
Moreover, Raphela remarked that while the Mpumalanga coal basin had for many years been South Africa’s primary coal mining centre, accounting for over 80% of the country’s coal production, its resources had been steadily depleting overtime. Therefore, government was seeking to unlock the untapped, substantial coal resources located in the Waterberg region of Limpopo.
The first phase in the expansion of the coal line between the Waterberg in Limpopo and Richards Bay in KwaZulu-Natal was completed in July 2016. It entailed the construction of a 1.8 km long passing loop at Matlabas, enabling 100 wagon trains to cross without disrupting the operation of other trains on the line.
Raphela explained that the project was a key component of Transnet’s plans to spend R21.8-billion over the next several years to increase rail capacity on the export coal line to 81-million tons.
The investment was in line with the parastatal's infrastructure investment programme, the Market Demand Strategy, which is aimed at creating capacity ahead of demand.
Further, Raphela remarked that coal would remain an important part of South Africa’s energy mix for several decades to come. This he said would be underpinned by the country’s compliance with the United Nations Framework Convention on Climate Change through the adoption of carbon capture and storage technologies to lower greenhouse gas emissions.