South Africa’s indigenous energy resource base is dominated by coal. Internationally, coal is the most widely used primary fuel, accounting for about 36 percent of the total fuel consumption of the world’s electricity production. About 77 percent of South Africa’s primary energy needs are provided by coal. This is unlikely to change significantly in the next two decades owing to the relative lack of suitable alternatives to coal as an energy source. Many of the deposits can be exploited at extremely favourable costs and, as a result, a large coal-mining industry has developed.

In addition to the extensive use of coal in the domestic economy, about 28 percent of South Africa’s production is exported, mainly through the Richards Bay Coal Terminal, making South Africa the fourth-largest coal exporting country in the world.

South Africa’s coal is obtained from collieries that range from among the largest in the world to small-scale producers. As a result of new entrants, operating collieries increased to 64 during 2004. Of these, a relatively small number of large-scale producers supply coal primarily to electricity and synthetic fuel producers.

About 51 percent of South African coal mining is done underground and about 49 percent is produced by open-cast methods. The coal-mining industry is highly concentrated with five companies accounting for 85 percent of saleable coal production.

[source:  http://www.energy.gov.za/files/coal_frame.html]

The decision by China to impose a coal import duty this week in an effort to cushion the struggling domestic sector is expected to cost coal producing countries, including South Africa and Australia, dearly.

China is the world’s biggest importer and consumer of half of the world’s coal.

More than 70 percent of domestic coal producers are operating at a loss, and a 24 percent drop in Chinese thermal coal prices this year and cheap imports threatened to sink the country’s industry.

Last week, China’s finance minister Lou Jiwei said the government would introduce a levy of between 3 percent and 6 percent on some coal imports as from Wednesday.

Australian Prime Minister Tony Abbott condemned it as a move “we just don’t want or need”, reported Sapa-AFP last week. “This is the kind of hiccup in our biggest and most important trading relationship that we just don’t want or need. We will work with the Chinese to get to the bottom of what seems to have happened overnight.”

China imported about 54 million tons of Australian thermal coal and 13 million tons from South Africa, said Reuters.

“The import tariff gives locals the room to raise prices over the next few months,” said Sibonginkosi Nyanga, a mining researcher at Imara S P Reid, on Friday. “Beijing probably is not interested in coal prices that are too high, since that would hurt the coal-fired power plants that feed China’s industrial complex. But it is afraid of letting coal miners fail, both because of the thousands they employ and the shadow-banking products they are thought to support.”

Xavier Prevost, a coal analyst at XMP Consulting, believed the new Chinese import tariffs were likely to make coal exports to China dwindle even more. “We will be exporting less coal to China in the future and that will affect the industry negatively. For how long? I don’t know, maybe forever.”

China said previously it would ban the import and local sale of coal with high ash and sulphur content starting next year in a bid to tackle air pollution.

Martyn Davies, the chief executive at Frontier Advisory, a research and strategy firm in Johannesburg noted that China’s relative gross domestic product slowdown, coupled with the government’s focus on qualitative rather than quantitative growth, was driving an agenda that was focusing on environmental issues.

“The long-term trend is away from coal which has accounted for up to 90 percent of China’s power requirements. This will lead to increased regulation and central government control of the sector, including blocking of low grade coal into the domestic economy. This will undoubtedly have a negative impact on countries exporting coal into China,” said Davies.

Shares in some of South Africa’s coal producers declined on Friday, including Exxaro Resources, down 2.13 percent to R123.86 and BHP Billiton, which slid 3.39 percent to R287.02.

Chinese coal mining shares turned higher on Friday. Datong Coal Industry closed up 3.33 percent to 7.75 yuan (R14), while Yanzhou Coal Mining rose 0.45 percent to 8.92 yuan.

The tax resumption is expected to increase the cost of imported coal by 20 yuan per tonne, narrowing the price gap with domestic products. Beijing also plans to ban the sale and import of “dirty” coal.

[Source:  http://www.iol.co.za/business/news/china-s-tariff-sends-shivers-in-coal-producing-nations-1.1763884#.VDt7z_mSySo]

Coal production, from mining to power generation, requires vast volumes of water.  Furthermore, pollution from coal mining can irreparably harm water resources.

In South Africa—one of the world’s most water stressed countries and one of the largest producers and consumers of coal—the water-energy nexus is a topic of great concern.

South Africa’s most important water stakeholders have a prime opportunity to respond. Uniting governments, companies, and non-profit organisations can help protect water resources while stabilising energy supplies – and eventually, reduce South Africa’s dependence on coal.

Sasol, a large South African energy and chemical company, has adopted a forward-looking philosophy. The company thinks of itself as a water planner rather than an energy planner.

Sasol’s business depends on large volumes of water. The South African government allocates 150m cubic meters of water to the company every year, 120m of which comes from the Vaal river system. It uses that for washing, extraction, and cooling during the production process.  To mitigate its long-term, water-related risks, Sasol is investing in water recycling, wastewater treatment, and alternative supplies, such as through desalination. The company also invests in water conservation projects outside its operations. One project fixed leaky taps and toilets for 114,000 houses in the Vaal river basin township of Emfuleni, and claims to have saved 4.6m cubic meters of water since 2012. Sasol realises that improving water efficiency for the municipality improves water security for the company and the community at large.

[Source:  http://bit.ly/1ENHwan]

South Africa’s coal-energy producers and regulators must contend with a major water quality concern: acid mine drainage. After a coal mine is abandoned, it often leaches highly acidic water, which then flows into surrounding ecosystems.

To date, more than 6,000 mines have been abandoned in South Africa, with damages from acidic water requiring an estimated 30bn rand in clean-up costs nationwide, according to a WWF report. Marius Keet, from South Africa’s water and sanitation department has said that acid mine drainage is South Africa’s greatest environmental challenge, while acknowledging that coal will remain a major growth driver for South Africa’s developing economy.

The best course of action, according to the WWF’s Christine Colvin, is long–term planning. She recommends banning mining activities in the Vaal river basin’s water source areas – lands at high elevation that collect rainfall and feed the rest of the river system. Areas with existing mining operations should be restored to a more natural state through interventions including water and soil treatment and replanting. Mined areas should then be improved further, Colvin argues, to compensate for acid-drainage related damages.

From a government perspective, Keet recommends a series of solutions to deal with the acid mine issue. South Africa’s presidential cabinet has already approved a series of short and medium-term preventative measures, including improved water-flow management in and out of abandoned mines, treatment and water quality improvements, and more monitoring and research.

Different parts of the Vaal river basin will require different local-level interventions—enlarging water treatment plants, installing new technology, and expanding existing water infrastructure such as pipelines and pumping stations.

In cases where mines are already abandoned, Keet recommends that polluters be pushed to pay clean-up costs rather than the government, although he admits it can be difficult to track companies who have gone bankrupt and severed ties with specific mining sites.

[source:  http://bit.ly/1ENHwan]