Thermal coal helping South Africa to keep inflation in check

SOUTH Africa’s reliance on coal to generate most of its power has earned the country thirteenth place among the world’s largest greenhouse gas emitters and yet the fuel is also helping to keep its inflation in check.

Citing S&P Global Ratings, Bloomberg News said South Africa did not “have as much inflationary pressure” than other parts of the world because it sourced its coal under long-term contracts from local suppliers.

In contrast, European nations have been scrambling to find alternatives to Russian gas supplies following its invasion of Ukraine. Eskom has been left relatively unscathed. Omega  Collocott, S&P’s director of corporate ratings said South Africa: “… ironically doesn’t have as much inflationary pressure because of dirty power generation”.

Inflation in the Euro-area has averaged 7.9% since March, and 6.1% in South Africa. Still, South Africans might be hard-pressed to come up with any other redeeming qualities about Eskom, which generates over 80% of the nation’s power from coal as it was closing in on record annual power outages just seven months into the year, said the newswire.

“Whether electricity is off or on is a different story, but I think that’s an interesting observation and may be a bright spot in the dark,” Collocott said.

Bloomberg reported earlier this week there are hundreds of abandoned coal mines in South Africa that now pose a deadly threat to nearby communities after the country’s government failed to have them cleaned up.

Citing a report by Human Rights Watch, the newswire said in an article republished by News24 that there are more than 400 empty coal mines across the nation threaten to pollute rivers and land by leaching acidic water.

“South Africa’s government has done almost nothing to address the toxic legacy,” Human Rights Watch said. Instead of rehabilitation by mining companies, improper assessments of future cleanup costs by the Department of Mineral Resources and Energy and weak enforcement have left residents facing the consequences, it said.