[miningmx.com] — MINISTER in the Presidency Trevor Manuel has reiterated South Africa’s need for a coal policy – given the country’s dependency on the mineral for energy – to guide the development of new coal sources and secure supply for the power generation sector.
The National Planning Commission, chaired by Manuel, on Friday released its National Development Plan – a framework on the policy directives needed to fast-track economic growth for the purpose of eliminating poverty in South Africa by 2030.
“Given fixed investments and low direct costs, coal will continue to be the dominant fuel in South Africa over the next 20 years,’ read the report.
“A national coal policy is urgently required, based on a realistic estimate of reserves, the sustainable supply of domestic coal needs for power, synthetic fuels and chemicals and sustainable expansion of coal export markets.’
The report admitted that policy and regulatory uncertainty in the mining sector, too little investment in new infrastructure as well as a failure to maintain existing infrastructure have all contributed to the coal industry’s stunted development.
“As coal reserves in the central basin diminish, a new rail corridor to the Waterberg coal field will need to be developed within an overall strategic infrastructure investment plan, which will also address aditional water supplies for the Lephalale area.
“Transport infrastructure for the coal line to Richards Bay also needs strengthening. With targeted focus, rail capacity will match port export capacity by 2020.’
Other transport possibilities mentioned include a link with Botswana’s coal deposits, as well as the proposed Trans-Kalahari rail connection which would be linked with expanded port capacity at Walvis Bay in Namibia.
The report suggested more formal structures should facilitate action between government, Eskom, Transnet, Sasol, independent power producers and the coal industry to optimise domestic coal use as well as exports.
“Collaboration in the earlier development of the railway from the central basin to Richards Bay and the development of the Richards Bay port offers a valuable lesson,’ read the report.
“Collaboration is also needed to address the coal industry fragmentation that has accompanied black economic empowerment in the sector. As a result, few smaller companies have the financial muscle to sign long-term take-or-pay contracts with Transnet to incentivise investments in initiative that address railway line capacity expansion.’
Export regulation
The report said that a balance had to be found between exports and local supply security, suggesting that the best use of resources should be backed by conditions in mining licences.
“It may be necessary to institute export permits for particular grades of coal as a temporary measure, with future energy investments influenced by coal prices that reflect international market price, and possible carbon taxes.’
Gas as alternative
The report said substituting gas for coal would help cut South Africa’s carbon intensity and greenhouse gas emmissions. Possibilities include coal seam methane, shale gas resources and imports of liquefied natural gas.
“Experiments are under way to assess the potential for using methane gas associated with coal deposits.
“These resources and technologies could make a significant contribution to South Africa’s energy needs, while reducing greenhouse gas emissions and carbon intensity.’
