HomeRegional NewsAfricaEd's note: Coal and the race to decarbonise

Ed’s note: Coal and the race to decarbonise

Word on the street is that global coal output declined by 2% in 2020. That is good news in the carbon emission reduction race, but this race appears to have legs.

At the starting line are developed nations who jumped the gun to benefit from the stability that fossil fuel power delivers.

And the latest news that India plans to build 370 coal-fired power plants while South Africa continues to trade heavily on coal markets pushes this race beyond an ultramarathon class.

So what lies ahead in our race to decarbonise?

The estimated 2% decline, reported by GlobalData, appears to be due to COVID-19-related lockdowns and restrictions, with significant reductions observed in the US (23.6%), Indonesia (13.1%), Russia (8.1%) and Australia (5.5%).

Attributing the reduction to lockdowns means that no real effort was made to reduce fossil fuel induced carbon emissions. It was the overall demand for electricity that slowed down during this period and will pick up again when lockdowns ease.

According to Vinneth Bajaj, associate project manager at GlobalData, coal production is set to recover by 3.5% to 8bnt in 2021, and the country to watch is India. “Its production is expected to increase from 777.7 Mt in 2020 to 1.2 bnt in 2025.”

In early 2020, the Indian Government gave clearance to begin operations for ten coal projects. The commercial auction of coal mines in India is expected to be a critical production booster.

Meanwhile, in South Africa, Anglo American announced its thermal coal operations demerger while Exxaro has sold three coal mines to a 100% black-owned junior miner, Overlooked Colliery. The colliery produces 2.4-million tonnes of coal a year and plans to double that to 4.8-million tonnes a year by 2022.

Exxaro had identified the Dorstfontein, Forzando and Tumelo operations as non-core assets some years ago. As the company looks to change its future strategic objective, are they dumping what is perceived as dirty assets on an unsuspecting black-owned company?

Perhaps not so unsuspecting since Overlooked also recently acquired Weltevreden and Halfgewonnen Collieries from Sudor Coal. They must have a plan to future-proof these assets ahead of coal’s outright decline.

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It’s a risk as most coal majors in the field are ridding themselves of non-core assets. And in South Africa, the sale is targeting black-owned miners driven by BBEEE policies—but is this empowerment or off-loading liabilities? These assets will soon be under harsh environmental oblations and trading in a shrinking market.  

Then again, while the moves towards a low-carbon future affect the prospects of coal mining in general, it’s not quite the dying industry some web stories make it out to be. Not as long as India (and China, for that matter) continue adding to their coal-fired generation base.

Until next week.
Nicolette

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.

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