ENERGY INDABA

REPORT FROM COAL COMMISSION

Rapporteur: Dr N. Malumbazo Moderator: Mr G. Njenga Secretariat: Ms. Z. Harber

Mr R. Phupheli Ms T. Sishuba

Head of Commission: Mr J. Mbele

Gallagher Estate 7 – 8 December 2017

Energy Indaba 2

PRESENTATION OUTLINE

• Introduction on the Role of Coal in the South Africa Energy Mix • Opportunities across the value chain • Local, regional and global opportunities • Constraints

a. Policy, b. Skills c. Environmental issues

d. Infrastructure e. Funding

f. Current and emerging technologies

• Coal contribution to inclusive growth • Coal contribution to Transformation • Energy efficiency • Possible solutions

Energy Indaba 3

SOUTH AFRICAN COALFIELDS

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KEY SECTORS IN THE COAL-CARBON VALUE CHAIN

ANALYSIS EXPLORATION MINING BENEFICIATION MARKETING UTILISATION VALUE-ADDED

PRODUCTION ENVIRONMENT

PRIMARY SECTOR – SUPPLY SIDE

SECONDARY SECTOR – DEMAND SIDE

MANAGEMENT, ECONOMCS, POLICY, LEGISLATION, LABOUR, ALTERNATIVE ENERGIES, GLOBAL STRATEGIES AND TRENDS

TERTIARY SECTOR

ROLE OF COAL IN SA

Coal contributes:

SA’s energy production : >93%

Carbon reductants (metallurgical industry): >98%

Petroleum industry: >30%

Chemical industry: > 200 major products

Carbon based products: 7000 C – based products

Local markets (direct users):

Eskom, Sasol and Metallurgical

+/- 6000 local users – brick and tile, pulp and paper, cement, sugar, hospitals,

mines, transport, textile, chemicals, breweries etc.

Advanced products:

Paint, Paper, Plastics, Fuel, Carbon Materials for smelters, Explosives and Chemicals

Eskom and exports

Coal for export requires beneficiation to produce good quality coal

Secondary coal will be used by Eskom.

OPPORTUNITIES IN COAL AS ENERGY MIX

• Role and opportunities of Coal across the value chain to grow the domestic economy, regionally and globally to create needed jobs – Abundance Coal Resources – Expertise and the Knowledge to utilise coal efficiently – R&D in New Clean Coal Technologies – Underground Coal Gasification and Coal-Bed Methane – Energy efficient Coal Fired Power Stations – Build more IPP Power Stations – Transition from carbon intensive to a low carbon economy - Transition plan is urgent

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OPPORTUNITIES IN COAL AS ENERGY MIX

South Africans must take ownership of the mining assets when foreign companies are disinvesting.

Localised industrialisation.

Increase in job opportunities (energy generation, transportation and transmission)

Export or trade electricity to African Countries.

Assessment of coal discards for usage in the energy generation (IPPs).

Electricity from coal is very cost-effective and with clean coal technology usage it will decrease even further

Water efficient technologies/usage of recycled water.

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CONSTRAINTS – Policy and Governance

Policy uncertainty – policies need to be stable (MPRDA).

Electricity industry structure – Allow IPPs to be able to sell electricity directly.

National Government Inter- departmental silos.

Mining Rights Approval process very long and cumbersome.

Need to develop a National Coal Strategy

Environmental levies and other planned tax structures.

Regulation of coal market prices.

Prioritisation of good coal quality for domestic usage.

Support of R&D agenda on clean coal technology.

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CONSTRAINTS - Skills

Adequate skills throughout the coal value chain.

Retention of skills – Pipeline of projects.

Aging of skilled Coal Researchers.

Funding for maintenance of existing and new R&D facilities

Coal researchers need funding for coal related projects (Universities, SoEs and NGOs - FFF).

New skills need to be developed if we want a 5% growth in the economy (CCT).

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CONSTRAINTS - Infrastructure

• Waterberg Coalfield needs new infrastructure (rails and water pipelines) – Transnet and DWA

– This will create employment and training opportunities.

Aging Eskom Power Plants - Decommission/life extensions.

Research facility with a focus on Clean Coal to energy projects.

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CONSTRAINTS - Environmental issues Lack of just transition plan to a low carbon

economy and climate resilient society.

Water usage – SA is a water scarce country

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CONSTRAINTS - Funding Capital requirements prevents black ownership and

transformation

Insufficient on-going support for completed projects

Need strategic PPP’s or government backing.

Unconventional funding models to be considered.

Look at good old market-capital model aspects to replicate.

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CONSTRAINTS - Funding Government to consider funding coal related

projects.

State need to prioritise funding of key sectors especially of unique South African advantage e.g. Power, GTL, Bio-products

DFI need to be more flexible towards funding of greenfield projects.

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CONSTRAINTS - Current and emerging Technologies

Lack of market penetration of Clean Coal Technologies.

Lack of awareness of clean coal technologies

Change the prevailing negative label on coal as “Dirty” through adoption of CCT Awareness campaigns.

Coal awareness at the Policy formulation level.

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Growth and Transformation

Socio economic development

Use social media platforms to inform potential entrepreneurs about availability of funding.

Enterprise development

Speed up coal IPPs

Lack of pronouncement at public gatherings on the future of coal is hindering development.

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Growth and Transformation Skills development

Speed up approval projects for optimal skills transfer and job retention

A need for skills audit in the coal to energy industry.

Develop new skills required for emerging technologies

Ownership and control

Create broader and more accessible coal market.

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Possible Solutions

Better and accessible funding models to improve coal research funding (Academia, SoEs, FFF)

Develop new skills for CCT and Coal beneficiation.

Display the strong political will to take a firm stance on coal’s future in our energy mix in a responsible manner.

Market Clean Coal Technologies.

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Possible Solutions

Don’t merely adopt recommendations from international studies, need to look at things at the SA needs.

Consider unconventional ways of funding, such as inviting communities to invest in bigger projects.

Create an enabling and coordinated legislative environment.

Create a sustainable, efficient and cost-effective integrated coal value chain.

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THANK YOU

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