The Coal Mining Sector in South Africa 2023

Introduction

Although South African coal production volumes have been decreasing in the past decade, sales have increased, largely due to rising prices. The country was ranked the seventh-largest coal producer and was the fifth-largest exporter in terms of volume in 2021. More than 90,000 people were employed by the coal mining industry in 2022. Low economic growth in South Africa, growing international opposition to coal mining and coal-fired power generation, Transnet’s underperformance on the coal export line that limits producers’ ability to increase exports, and Eskom’s decommissioning of power stations are some of the challenges faced by the industry.

Opportunities

Some major companies are exiting coal mining or selling mines, creating opportunities for smaller companies to enter the industry.

Outlook

Climate change issues are expected to have a significant impact on the global coal mining industry in the future. Many countries have introduced measures to reduce the role of coal in their energy mix and several European countries plan to phase out the use of coal over the medium term. Although these measures will reduce the use of coal in several developed countries, this will be more than offset by increased coal consumption in emerging economies. Global coal consumption is expected to peak in 2024 before decreasing due to a shift towards cleaner energy. Over the medium term, coal production is forecast to slow faster than demand, due to underinvestment in new production capacity. As Eskom plans to mothball old power stations, its coal usage will decline progressively over the next three decades. South African coal mining companies expect export demand to remain strong for at least the next 20 years. In 2023, Europe is expected to continue to import large volumes of South African coal.

Report Coverage

This report on the coal industry in South Africa includes comprehensive information on the size and state of the sector including production, price and trade statistics, as well as information on the major players, developments and corporate actions. There are profiles of 14 notable coal mining companies including Seriti Resources, Thungela Operations, Exxaro Resources, Sasol Mining, ARM Coal, Glencore and Canyon Coal. There are profiles of 10 coal testing laboratories including Mintek, the South African Bureau of Standards and Bureau Veritas Testing and Inspections South Africa.

Strengths

About 86% of the country’s electricity is generated using coal, thereby guaranteeing a market for thermal coal. Large coal export terminal at Richards Bay with the capacity to export 91 million tonnes per year. Large coal mining companies are well- established in South Africa. Significant coal reserves guarantee mining operations for about 40 years at present production levels. South Africa was the world’s seventh-largest producer of coal in 2021. South Africa’s geographical position enables it to supply coal to European and Asian markets. The country was the fifth-largest exporter of coal in 2021.

Threats

Competition from other energy sources. Eskom’s decommissioning of power stations. Growing international opposition to coal mining and coal-fired power generation, due to environmental concerns. Low economic growth in South Africa. Transnet’s underperformance on the coal export line limits producers’ ability to increase exports.

Weaknesses

A few large companies control most of the coal reserves, Richards Bay Coal Terminal allocations, and supply to Eskom. Shortage of skills in certain disciplines.