Why coal mining matters

Coal mining [photo] Coal remains one of South Africa's most abundant and valuable resources. Coal has been instrumental in South Africa's development, not only for the mining sector, but also for the broader industrialisation of the country.

Indeed, South Africa derives over 81% of South Africa's electricity requirements and over 30% of liquid fuel demand (coal-to-liquids technology) from coal.

The coal mining industry's impact is far reaching, and has a significant effect on both the supply and demand sides as well as other industries such as the electricity, manufacturing, construction and finance sectors.

South Africa ranks amongst the world's top ten major global coal producers, producing around 250 million tonnes annually since 2010. In 2015, coal production represented 3.7% of global output. At current rates of production and consumption, South Africa has reserves sufficient to satisfy its domestic needs for more than a century.

In 2017, the coal industry:
  • employed 82,248 people
  • paid employees R22 billion in earnings
  • indirectly created and sustained 170,000 jobs outside the industry
  • paid R1.1 billion in royalties
  • contributed R123.2 billion in sales
  • was a major contributor to transformation through the Mining Charter and to community development through SLPs

Location and geology

Location and geology [map]

South Africa's coal resources are contained in the Ecca deposits, a stratum of the Karoo Supergroup and date from the Permian period between 280 and 250 million years ago. Coal deposits are largely located in the north-eastern quadrant of the country in the Mpumalanga, Limpopo, KwaZulu-Natal and Free State provinces. The coal measures are generally shallow, largely unfaulted and lightly inclined, making their exploitation suitable for open-cast and mechanised mining.

Richards Bay Coal Terminal

The Richards Bay Coal Terminal (RBCT) was established in 1976 as a partnership between the leading coal companies at the time. Initially, the terminal had a capacity of 12 million tonnes. This has steadily increased, with a fine balancing of the needs of rail capacity to carry coal from inland collieries to the coast to its current 91 million tonnes design capacity.

For many years, as this export capacity was being expanded, sea-borne coal prices were generally greater than domestic ones. In consequence there was considerable competition for capacity at the RBCT and the rail line that serves it. However, the commodities slump of the past few years and the glut of bulk commodities on international markets has resulted in export prices falling by more than half since 2013 as exporters from competing countries struggled to maintain their market shares.

Uses of coal

Coal is an essential raw material and fuel for important industries. There are two primary types of coal, thermal coal and coking or metallurgical coal. These two kinds of coal have different qualities. Thermal coal is used to produce fuel and electricity while coking coal, with a higher carbon percentage, is better suited for manufacturing and chemical applications.

Some of the major uses of coal include:
  • Electricity production
    Coal is mainly used as fuel to generate electricity through combustion. Thermal coal is used in power stations to generate electricity.

  • Steel production
    The steel industry is the second largest user of coal. Coal and iron are essential raw materials used in the production of steel, which is one the most useful metals products known to man.

    Coking coal is a solid carbonaceous residue derived from low-ash, low-sulphur bituminous coal. Coking coal is used as a fuel to melt iron in furnaces to produce cast iron which in turn is further refined to produce steel.

  • Cement
    Coal is used as an energy source in the cement industry given that the production of cement is extremely energy-intensive. By-products generated from burning coal are also used in concrete production.

  • Paper and aluminium industries
    Both industries are energy-intensive. Given that coal is currently the most cost-effective source of energy, it is an essential input. Historically, the price and availability of coal has played an important role in the growth of these industries.

  • Chemical and pharmaceutical industries
    Many chemical products are manufactured from the by-products of coal. Refined coal tar is used to make chemicals such as creosote oil, naphthalene, phenol and benzene.

  • Coal gas and coal liquid as transportation fuel
    Coal can be converted into gas and liquid which can be used to fuel cars, motorcycles and ships.

  • Plant fertiliser
    Coal can be turned into ammonia fertiliser by breaking it into carbon monoxide and hydrogen gas. The hydrogen mixes with nitrogen to make ammonia.