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South Africa’s coal sector headed for major job losses

South Africa’s coal sector may be facing considerable job losses as the country’s latest energy plan looks to cleaner power generation options.

Coal generated R129 billion in sales in 2017 – about 28% of South Africa’s total mineral sales and directly employed over 82 000 people, whose earnings amounted to some R22 billion.

Apart from being South Africa’s largest mining contributor to gross domestic product and the third-largest employer in the mining sector, it also created another 170 000 indirect jobs.

SRK Consulting principal geologist Lesley Jeffrey explains that the government’s latest draft Integrated Resource Plan (IRP) envisaged only 45% of the nation’s supply of energy coming from coal – down from 48% in the 2010 draft of the IRP.

“In terms of the electricity coming from coal-fired power stations, this planned reduction represents about 4 000 MW of energy that will in future not require being generated by coal,” says Jeffrey.

“This amount is equivalent to the closing of a large power station like Kendal – the last big power station built before work began on Medupi and Kusile,” she continues.

The amount of coal required to produce this energy is roughly 14 Mt each year on average, which would in future then not be required by South Africa’s energy generating facilities.

“If the industry does not need this tonnage, the impact on employment is about 14 000 direct and indirect jobs – which would previously have been required but would now be shed over time.

“Apart from the employees themselves and their dependents, the loss of these jobs would also likely affect the total number of indirect jobs created by the coal sector,” she notes.

In addition Jeffrey points out that Camden, Komati and Grootvlei power stations would probably be the first to be closed, due to their age and the high production costs.

The rural location of many of these older plants, however, means that they are among the few sources of employment in these areas – a factor likely to aggravate the local socio-economic impact of the job losses.

As a counterpoint, Jeffrey highlights the positive environmental impacts to be achieved by the IRP’s proposed movement towards greater usage of natural gas – which would help bring South Africa more in line with the Paris Accord.

“This is a constructive direction, although as a country we have little of our own gas to exploit at this stage,” she comments.

“Our imports from Mozambique could be increased, and there is scope for importing liquid natural gas – which would require a special port, extensive technological infrastructure and distribution pipelines.”

There were also prospects for extracting gas in the form of coal-bed methane – also referred to as coal seam gas – from the Waterberg coalfields in Limpopo province.

“Pilot projects in the area suggest that there is sufficient gas in exploitable quantities, but there is a lack of infrastructure to transport the commodity to where it is needed,” says Jeffrey.

“The two main distribution options are pipelines, or facilities that could compress the gas into liquid form.

“If government is serious about this gas focus, however, the possibility of extracting gas in this way may be preferable to mining,” she concludes.
Source: Mining Review Africa

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