Analyst highlights ample continued opportunities for South African coal - bdsthanhhoavn.com

Analyst highlights ample continued opportunities for South African coal

Now is the time to help junior coal mining companies expand or help bring newcomers on board, amid high coal prices and solid existing and incoming demand, XMP Consulting senior coal analyst Xavier Prévost said this week.

He noted, in a lecture hosted by the University of the Witwatersrand on June 8, that South Africa was poised to replace displaced coal supply from Russia, as many markets moved to boycott Russian exports following that country’s invasion of Ukraine.

For example, the European Union (EU) has agreed to a partial embargo on Russian oil, immediately impacting about 75% of Russian oil exports.

“If South Africa can export 25% of what Russia used to export to Europe, we can make a fortune,” Prévost averred.

If the EU is to ban all Russian coal imports by August 10, as planned, coal traders are anticipating a jump in European demand.

Another promising opportunity is that of India’s State-owned Coal India issuing tenders for coal procurement. The country’s coal demand is expected to surge by 48% to 1.45-billion tons a year by 2029/30, from 980-million tons in 2021/22.

About 7 GW of energy generation capacity is set to be commissioned in India over 2022 and 2023, with 39 thermal coal plants being built.

In 2021/22, India added eight thermal coal plants totalling 4.49 GW of capacity.

India imported 219-million tons of coal in 2021, and 47-million tons in the year-to-date.

However, Prévost cautioned that India’s interest in South African coal was limited, as high calorific value 6 000 kcal/kg coal (RB1), which South Africa produced, was too expensive and, conversely, RB3 (5 500 kcal/kg), used in sponge steel production was not in demand in the country, after India imposed export duties on some steel products.

Once international prices start cooling, many consumers, including India, will resume imports. Coal has nonetheless seen a rebound in global demand in recent years.

Apart from high pricing and reluctant buyers in some regions, with no deals for coal having been reported by the Richards Bay Coal Terminal in the last week, there are also the issues of South Africa’s coal stockpiles being low and logistics – railways and ports – being highly inefficient.

Prévost said State-owned freight utility Transnet’s railway lines had been suffering under a scourge of vandalism and theft, while the ports were bearing the brunt of various negative impacts in recent years.

He lamented that although there were huge opportunities for South Africa to continue supplying coal to the world, it needed to bring more coal miners on stream, resolve logistical issues and continue to develop cleaner coal technologies.

“As a result of the current lack of incentives and capital to implement new coal projects, South African production is stagnant and old mines are almost exhausted or dropping production drastically.

“What South Africa needs now is to bring new mines on stream,” he said.

COAL RATIONALE

Prévost advocates for continued use of coal currently and in the future, deeming it critical to the world as it provides affordable, much-needed electricity, as well as builds societies through its use in steel and cement.

About 37% of the world’s electricity is generated from coal, while nearly 70% of global steel production depends on coal, according to World Coal Association (WCA).

“There is not another source of energy more dependable, abundant and cheap that can replace coal. Coal is the only alternative to energy poverty,” Prévost said, citing the WCA and adding that there were still 1.1-billion people globally without access to electricity.

As it stood, China, Russia and the US had 98% of the world’s 860-billion tons of coal resources, but there remained many undiscovered resources around the world. Russia was at risk of having no demand for its 225-billion tons reserve of coal, as President Vladimir Putin has rendered Russia’s economy ‘cancelled’, Prévost noted.

There were enough coal resources to sustain production for 118 more years, while this figure amounted to about 50 years for both oil and gas, Prévost highlighted, citing information published by the International Energy Agency.

Coal is found in 70 countries and actively mined in 50.

While South Africa’s much smaller share of coal reserves seems insignificant, it has the advantage of being more competitive in terms of location to export markets and its higher quality.

For example, coal remains the fuel of choice for South East Asia. The region expects to increase coal’s share in power generation from 32% in 2014 to 40% in 2040, while coal remains king in countries such as India and Germany.

CLEANER FUTURE

Prévost believes South Africa’s coal resources can provide low-emitting, cost-effective and reliable electricity well into the future, with the right technology.

For example, he says, high-efficiency low-emission (HELE) technology ensures uninterrupted electricity, while reducing or eliminating pollutant emissions, including carbon dioxide, sulphur and nitrogen oxide, and particulates.

“If we make coal more amenable to be used, with lower emissions, that is the future of the energy industry. We must clean up coal at mine-level, industry-level and at power stations too.

“If we can use the carbon from coal to create high-value products, such as activated carbon, electrodes, composites, nanotubes, graphene and carbon pitch fibres, all the better,” he stated.

Prévost argued there were solutions to solving some of the coal industry’s problems, including underground coal gasification, fluidised bed combustion, integrated coal gasification, and combined cycle and supercritical technology.

For areas lacking water and logistics, dry technologies are being developed and on-site processing with transmission lines can be developed.

Prévost was confident that new industries could arise from the valuable materials derived from coal and its emissions.

“We do not have to stop using coal, but stop polluting with coal,” he concluded, citing comments previously made by Fossil Fuel Foundation carbon director Rosemary Falcon.

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