The Fossil Fuel Foundation (FFF) will, at its 10th Junior Coal Mining Ventures conference on May 28, 2015, discuss whether Eskom’s current coal supply strategy to increase the supply of coal from emerging BBBEE junior coal miners.
Junior miners are companies with an asset base of R50 million to R7 billion. Those above R7 billion are regarded as the majors, below R50 million are small scale miners and below the small scale miners are the artisanal miners, according to the South African Mining Development Association.
The FFF reports that the coal industry contributes some 70% to the South African energy economy and will continue to play a major role for the generation of electricity, production of synthetic fuels and the export market well into the future.
It goes on to say that costly alternative electricity, such as wind and solar, will not be able to reduce the demand for coal significantly in South Africa in the foreseeable future.
In light of this, it is anticipated that Eskom will require some additional 4-billion tons of coal over the next thirty years. This is approximately equivalent to 133Mtpa with a capital requirement in the order of R100 billion to establish new mines.
The FFF notes that this increased demand by Eskom represents at least 10% of the remaining national coal reserve but asks where the additional tons will come from?
The FFF says that emerging miners are required to provide a reliable and sustainable supply of coal as their contribution to keeping industry rolling, while junior miners are able to exploit small deposits all over the country that larger coal mining companies would not consider suitable due to the high operating costs involved.
However new entrants to the market face many challenges. Many inappropriate business decisions are often taken by junior miners as a direct result of an inadequate skills and knowledge background.
The FFF therefore believes that a co-ordinated strategy in providing a ‘One Stop’ facility is urgently needed to assist the new entrants.
‘An opportunity must be created where junior miners can obtain the correct and appropriate information from an ‘accredited body’. Here consultants can register as service providers and the junior miners can be assured of the required professional service’, says Gerhard Esterhuizen, an independent consulting geologist and presenter at the conference.
The time has now come to focus on the many challenges that face the emerging coal mining sector, in order to enable the emerging miners to play their role as key contributors to the South African economy.
According to the South African Coal Roadmap, the development of new mines is fundamental in ensuring existing coal-fired power stations remain in operation.