Serious challenges face the South African junior coal mining sector

Minerals Council Junior and Emerging Miners Desk head Grant Mitchell

Minerals Council Junior and Emerging Miners Desk head Grant Mitchell

3rd February 2023

By: Rebecca Campbell

Creamer Media Senior Deputy Editor


Font size: - +

The major problems facing the junior and emerging coal mining sector in South Africa are finance, a dysfunctional regulator and logistical difficulties. These were highlighted in a panel discussion at the Southern African Coal Conference, in Cape Town, on Friday.

Minerals Council Junior and Emerging Miners Desk head Grant Mitchell explained that, in South Africa, junior miners are small and midtier producers, and not, as elsewhere, explorers who find and start the development of new ore bodies. Exploration activity in South Africa is, he pointed out, “pretty much defunct”. The Council defines junior miners as having a market capital of up to R500-million.

Of the Minerals Council’s 77 members, 38, or effectively 50%, were juniors, he noted. In 2018, total revenues generated by the country’s juniors, in all mining sectors, had been R54-billion; last year, they totalled R88-billion. This growth had been achieved despite the Covid-19 pandemic, and despite the challenges the sector faced. “The sector is growing, and growing exponentially,” he highlighted. How much each sector of mining contributed to this growth had not been determined, but Mitchell suspected that coal juniors were a major contributor.

But the country’s mining regulator was dysfunctional, meaning that it could take years to get a mining licence issued, he observed. And funding was hard to secure, particularly for thermal coal projects. “Despite these challenges, we have this growth.”

“We haven’t shut our door necessarily on coal,” assured Industrial Development Corporation Mining & Metals head Thabiso Sekano. “We’re among the few financial institutions in South Africa that still look at coal favourably.”

Major investors on the Johannesburg Stock Exchange (JSE) were still interested in coal, assured JSE Primary Markets business development manager Patrycia Kula-Verster. She highlighted the opportunity provided by the JSE’s new Private Placement Market, launched in March last year. This provided a platform from which emerging coal miners could tap into private capital. Further, even coal miners could tap into green and sustainability investment funds. “You can really get creative with these instruments,” she noted.

Logistics were another major issue for the country’s junior coal miners. Juniors seeking to raise capital for a mine had to make certain that they could transport their coal from that mine, warned Makoya Group business development and commercial executive Divyesh Kalan. Not that this problem was new, he pointed out; it was a decade old. Rail capacity was very inadequate. “Obviously, trucking has been a saviour for most of them [juniors].” But falling coal prices could make trucking unaffordable. Juniors needed access to railway sidings; they also needed access to the ports.  

“Even in Transnet, the rail and ports don’t talk to each other,” he highlighted. Miners had to negotiate separate and independent contracts with Transnet’s railway and port divisions. There had, he observed, been a lot of talk about solving this, but there had been little action.

In fact, Transnet had gone backward on this issue, affirmed Ikwezi Mining executive director Zaheer Surka. Once, they had had commercial integration between their rail and port operations, but they had abandoned it. “It does make it very challenging for junior miners.” Junior miners needed port space to export, but port access was limited. “All these junior miners have had to truck their coal; there is no rail capacity,” he stressed.

Botswana-based junior miner Minergy was exporting its coal, by truck, through the Port of Walvis Bay in neighbouring Namibia, reported Minergy CEO Morne du Plessis. The company used about 250 trucks for this, which operated a three day ‘circuit’ from the mine to the port and back. Sourcing these trucks had been a challenge, he noted, but the company had benefitted from being an early mover. The rising fuel price was a concern but was still manageable. Trucking to Walvis Bay allowed the mine (an opencast operation) to function at full capacity. He also pointed out that the Botswana government had a very positive attitude towards the development of the country’s coal sector.

Edited by Creamer Media Reporter



Actom image

Your one-stop global energy-solution partner

Showroom image
Alcohol Breathalysers

Supplier & Distributor of the Widest Range of Accurate & Easy-to-Use Alcohol Breathalysers


Latest Multimedia

sponsored by

Economic growth a top priority for GNU
Economic growth a top priority for GNU
19th July 2024 By: Creamer Media Reporter
Magazine round up | 19 July 2024
Magazine round up | 19 July 2024
19th July 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?







sq:0.353 0.405s - 192pq - 2rq
Subscribe Now