Coal has leapfrogged gold as South Africa’s most important resource, contributing more to gross domestic product, according to StatsSA.

As the resource has become critical for electricity generation in South Africa, a protracted coal mining strike could leave the economy in a worse state than if gold-sector negotiations turn sour.

Xavier Prévost, senior coal analyst at XMP Consulting, said coal was the top contributor to South Africa’s GDP in 2014 with 101.5 billion rand ($8.319 billion US) in revenue.

Gold was at R46.8 billion ($3.83 billion US) , behind Platinum Group Metals (PGM) and iron ore, which generated R77.5 billion ($6.35 billion US) and R58.7 billion ($4.81 billion US) in revenue respectively.

“Coal (is the most important commodity for the future of South Africa’s economy) because it is our source of energy. Without it the whole country will be paralysed, including the gold, iron ore and PGM mines,” said Prévost.

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Although still heavily dependent on fossil fuels, South Africa has been quietly creating one of the world’s most progressive alternative energy plans. Solar, biomass and wind energy systems are popping up all over the country and feeding clean energy into the strained electrical grid.

“It is set to completely transform these deep rural communities in terms of healthcare, education, job creation and a raft of other interventions. All this while putting green electricity on the grid at affordable prices,” said Johan van den Berg, director of the South African Wind Energy Association.

Wind energy from new projects now costs 5 US cents per kWh, roughly half the cost of new coal. Renewable energy has a long way to go to overtake South Africa’s reliance on coal though. It is number 11 in the world for total CO2 output from energy use and the fifth largest producer of the climate-changing fossil fuel.

The situation seems poised to get worse as construction continues on Medupi, the largest dry cooled coal-fired power station in the world.  Meant to be completed by 2013, the station has been mired in delays and cost overruns since construction first started in 2007. Meanwhile, wind power has been quietly piling on capacity. Tina Joemat-Pettersson, the South African minister of energy said in a recent speech that the country has added a total of 4,322MW of renewable energy capacity in less than four years. Medupi, whenever it is finished, is designed to supply 4,764MW.

That renewables have almost surpassed the output of such a station in about half the time of it’s still-unfinished construction is a testament to the government’s commitment to alternative energy, the maturity of the technology and the work of hundreds of companies, organisations and partnering governments.

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South Africa’s state power utility Eskom doesn’t not have enough coal in stock to meet its generation needs beyond 2016, Public Enterprises Minister Lynne Brown said Wednesday.

According to Reuters, the 17 million tonne coal shortfall will become obvious this year at Matla, Tutuka and Hendrina power stations, while Kriel and Arnot Power Stations will began suffering in 2016.

South Africa’s depends on coal to generate 85% of its electricity. But Eskom, which supplies 95% of the country’s power needs, is struggling to meet demand after delays in building new power stations and as aging plants experience failures.

Coal miners operating in the country are not making it easier either. Recently Glencore (LON:AAL) and Anglo American (LON:AAL) announced they’d be scaling back output or selling stakes in mines as the price of the fossil fuel has dropped 22% in the past year.

[Source:  http://www.mining.com/]