News Room


Date Published: 01 Feb 2022







Programme Director,  

Deputy Minister of Mineral Resources and Energy, Dr Nobuhle Nkabane

Captains of the Industry

Director General and Team DMRE  

Distinguished guests 

Members of the media


Greetings to you all. 

We have organized this colloquium as a platform to engage on the challenges facing the coal industry and to flag out the possible areas where we can put our minds together to resolve any bottlenecks impeding growth and the development of the sector.

It is no secret that the coal mining industry is faced with serious challenges arising mainly from the usage of coal for energy generation. It should be noted that the coal mining and coal power generation industries are so interlinked that they are naturally lumped together when dealing with the challenges of carbon emission. 

Mining companies should naturally be concerned about the usage of coal for energy generation, and form part of the debate about them themselves. They must participate in the investigations of technologies and innovations to help move from higher to lower carbon emissions as part of our just energy transition. 

Whilst we commit to combatting climate change, we must be mindful of the three major factors pertinent to our national realities: 

  • South Africa is highly endowed with coal. 
  • South Africa is highly depended on coal for its baseload and energy security. 
  • Coal mining and energy generation industries do not only bring massive revenue but also employ thousands of employees. 

The critical question then becomes how can we respond to these national realities? This is what the energy transition discourse and programme must engage with. 

The discourse on the challenges facing coal mining and energy generation industries cannot be that of the Ministry of Mineral Resources and Energy. It is an industry discourse. 

The coal sector must take the bull by the horns in clarifying what must be the national development trajectory with regards to the usage of coal against the realities that I have alluded to. We need to hear from the captains of the industry on what are their envisaged roles and what their areas of support or synergy in the just energy transition. 


Coal is the second most important energy source in the world after oil. It is also one of the cheapest and abundant energy carriers. Coal power continues to play an important role in improving the welfare of communities across the globe, having lifted hundreds of millions of people out of energy poverty and spurred industrial development in many nations. 

In South Africa, coal remains an essential component in the country’s energy mix, accounting for about seventy (70) percent of our primary energy consumption, about seventy-five (75) percent of our electricity generation and about thirty (30) percent of petroleum liquid fuels. 

Coal is also an essential component of the iron and steel production, cement manufacturing, ferroalloys, industrial and manufacturing sectors. 

South Africa is ranked amongst the top ten (10) countries globally in terms of coal reserves, standing at number six (6), in terms of production we are ranked at number seven (7) and number five (5) in terms of exports.  

South Africa is host to considerable mineral reserves of strategic significance to the global economy with recent studies estimating the mineral preliminary gross in-situ value of South Africa at 9.6 trillion USD, an almost 290% increase from the previous estimate of 2.5 trillion USD. Of these, about 43% are coal resources, followed by PGM’s (31.5%) and Gold (11.7%).

The coal sector produced approximately 248 Mt of saleable coal in 2020. Coal was the highest revenue earner, contributing 21.4 percent (R130.57 billion) of total mining revenue (R608.99 billion). The coal sector was the highest earner of total local sales revenue contributing 53.42 percent (R85.02 billion) of (R159.16 billion). The sector generated 10.13 percent (R45.55 billion) of total foreign exchange earnings (R449.83 billion). In addition, coal was the third largest employer in the mining industry after precious metals and PGMs, directly employing 89 548 people, 20.48 percent of total mining industry employment of 437 288. These employees received over R30.71 billion in wages and salaries, which constituted 20.27 percent of the mining industry’s total wage income (R 151.53 billion).

For developing nations like South Africa, coal is a very affordable source of primary energy, and it is abundantly available. However, it faces several challenges not least among them, the fact that as a major contributor to greenhouse gas (GHG) emissions, it is viewed as responsible for environmental degradation. In this regard, financial institutions and green energy advocates have increased the pressure to shift away from the reliance on coal. 

At an international level, governments have developed and rectified legislation to cut down the use of coal in electricity generation. As a replacement, environmentally friendly technologies are subsidised with the hope that soon they will replace coal in the generation of electricity. In countries such as the US, Britain and Germany, coal power has declined quite significantly having been replaced by nuclear and renewables. 


The South African government ratified the Paris Agreement signalling that government is committed to addressing the challenge of climate change. The Integrated Resource Plan (IRP) 2019, details our trajectory from high to low carbon economy.  

As a significant player in the country’s economy, government intends introducing interventions that will not sterilise the development of its coal resources. Instead, all new coal power projects would be based on high efficiency, low emission technologies and other cleaner coal technologies coupled with underground coal gasification, Fluidized Bed Combustion (FBC) and the development of Carbon Capture and Storage (CCS). 

Other plans in place to tackle emissions and help the country achieve its commitment include, Carbon Tax, Carbon Budgeting system and compulsory Green House Gas reporting. 

South Africa’s National Treasury has included several transitional tax-free allowances in the Carbon Tax Bill. The Bill outlines a phased implementation of the tax, with the first phase introduced for implementation from the 1st of June 2019 to the 31st of December 2022. The second phase is scheduled to be implemented from 2023 to 2030 and, the phasing has been aligned with South Africa’s nationally determined contribution commitments under the Paris Climate Agreement. During the first phase, tax-free allowances will range from 60% to 95%, to provide affected companies with sufficient time and flexibility to transition to lower-carbon processes. 

Of note, is that the implementation and enforcement of stricter environmental plans in South Africa will adversely affect the electricity sector; liquid fuels manufacturing; and basic iron and steel industry. Together these three accounts for more than eighty (80) percent of domestic coal demand in terms of value and approximately seventy (70) percent in volume. 

Despite the country’s significant coal resources there are binding constraints to the future growth of the coal industry. Unlocking the economic potential of coal is dependent on addressing constraints within the coal value chain, which may result in the stagnation and ultimately the shrinking of the coal industry.

Working together, we can ensure that the coal industry remains the mainstay of South Africa’s energy basket, a strategic sector, and a job provider for the foreseeable future. 

The new Eskom build and the Independent Power Producers can sustain the coal industry. Global coal consumption is expected to continue an upward trend in the medium term, driven by demand from developing nations in Asia, Africa and South America. This will offset the ongoing decline in Europe and US. 

India, currently South Africa’s biggest coal export market, has agreed to voluntarily reduce Green House Gas emissions intensity and thus far, this has not affected SA coal exports to that country, which have grown to almost half the total coal exports in revenue terms. 

Other areas for possible export growth, in addition to India, include countries such as, Pakistan, Malaysia, Taiwan, and Bangladesh. 

There is no scope for further growth in Europe, particularly countries in the European Union, because of environmental laws. 

Strong international coal prices of around US$130/t have raised the attractiveness of exports, with most of South Africa’s export coal going to India and Pakistan. China is also reopening opportunities for imports from South Africa, following its trade wrangling with Australia, previously an important coal source for them.

Domestically, the commodity will continue to play a critical role in the reconstruction and recovery of our economy. However, we are mindful that at some point, coal use will eventually decline as nations and businesses strive to reduce their environmental impact and abide by climate policies. 

We must as a sector map out clearly an engagement strategy on the national interests with regards to coal. The strategy will enable us to speak with many voices but one message. 

Countries at COP26 were asserting their national interests and therefore the pace of the global energy transition discourse is determined solely by what works in the advanced economies. Nothing prevents us from asserting our own trajectory on the energy transition as outlined in the IRP 2019. 

Germany’s threats on Nord 1 and Nord 2 pipeline from Russia as a consequence of the Russia versus NATO/Ukraine standoff may mean higher demand for coal. 



It is upon to the coal industry to map out its own future and ensure that a just energy transition speaks to the national development interests of our nation. The transition must speak to the contribution of coal to energy security, sizeable contribution to GDP, large contingent of employees and other relevant economic factors. 

Our climate change agenda cannot afford to ignore these national interests. They must be integrated into our plans to move from high carbon emissions to low carbon emissions. 

This battle is yours to fight. Your individual business interests are tied with our national interests. 

You should not be shy to fight for South Africa’s national interests on coal mining and coal power stations as long as you meaningfully demonstrate your commitment to the just energy transition. 

I thank you.